If Two Bundles Are on the Same Indifference Curve,then

question 101

Multiple Choice

If two bundles are on the same indifference curve,then

• A)the consumer derives the same level of utility from each.
• B)the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility.
• C)no comparison can be made between the two bundles since utility cannot really be measured.
• D)the MRS between the two bundles equals one.

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Definitions:

Compound-interest

Interest computed on both the original sum invested or loaned, as well as on the interest that has been added to this principal amount over earlier periods.

GIC

A Guaranteed Investment Certificate, a Canadian investment that offers a guaranteed rate of return over a fixed period.

Investment

The allocation of resources, such as time, money, or effort, in hope of generating a future benefit or profit.

Strip Bond

A debt security that has had its main components, namely the coupon and the principal, separated to be sold individually as zero-coupon bonds.