In Terms of Utility Theory, "Equilibrium" in the Real World

question 152

Multiple Choice

In terms of utility theory, "equilibrium" in the real world means that

• A)households are consuming as much of every commodity as they would like
• B)households have spent their incomes in such a way that their overall satisfaction is maximized
• C)households have spent their incomes in such a way that their marginal utility is maximized
• D)households have spent their incomes in such a way that their marginal utility is zero for every product consumed
• E)households have spent their incomes in such a way that their total utility is zero

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Definitions:

Zero-Sum Game

A game theory concept where one participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).

Negative-Sum Game

A situation in which the total losses incurred by the participants are greater than the total gains.

Strategic Game

A situation or model in game theory in which players make decisions by strategically considering the choices and payoffs of other players.