A Utility Function Is a Mathematical Formula That Assigns to Each

question 39

Multiple Choice

A utility function is a mathematical formula that assigns to each consumption bundle a numeric value that represents the:

• A) opportunity cost of consuming the bundle.
• B) consumer's relative well-being from consuming the bundle.
• C) price the consumer would pay for the bundle.
• D) rates of substitution of the goods in the bundle.

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Definitions:

Scientific Theory

A well-substantiated explanation of some aspect of the natural world that is acquired through the scientific method and repeatedly tested and confirmed through observation and experimentation.

Testable

Characteristics of a hypothesis or theory that allows it to be disproved or supported through scientific experimentation or observation.

Predictions

Statements or claims made about the future based on current evidence or observations.

Recently Reported

Pertains to information or events that have been disclosed or made known in the near past.