ECO 3101 Midterm Questions with
Complete Answers
Assumptions of consumer preferences - Correct Answers: Completeness, Transitivity, More is preferred
to less
Are you utility functions ordinal or cardinal? - Correct Answers: ordinal
Indifference curves cannot - Correct Answers: Intersect, slope upwards, be an area
Marginal Utility - Correct Answers: How does utility change when you change consumption of a given
good
MRS Equation - Correct Answers: -MUx/MUy
The slope of an indifference curve reveals - Correct Answers: the marginal rate of substitution of one
good for another good
Preferences are complete when - Correct Answers: The consumer can compare any two market baskets
of goods and determine that either one is preferred to the other or that she is indifferent between
them.
A curve that represents all combinations of market baskets that provide the same level of utility to a
consumer is called - Correct Answers: an indifference curve
A budget line shows the combinations of - Correct Answers: prices that place a limit on the purchase and
consumption of two goods.
Complete Answers
Assumptions of consumer preferences - Correct Answers: Completeness, Transitivity, More is preferred
to less
Are you utility functions ordinal or cardinal? - Correct Answers: ordinal
Indifference curves cannot - Correct Answers: Intersect, slope upwards, be an area
Marginal Utility - Correct Answers: How does utility change when you change consumption of a given
good
MRS Equation - Correct Answers: -MUx/MUy
The slope of an indifference curve reveals - Correct Answers: the marginal rate of substitution of one
good for another good
Preferences are complete when - Correct Answers: The consumer can compare any two market baskets
of goods and determine that either one is preferred to the other or that she is indifferent between
them.
A curve that represents all combinations of market baskets that provide the same level of utility to a
consumer is called - Correct Answers: an indifference curve
A budget line shows the combinations of - Correct Answers: prices that place a limit on the purchase and
consumption of two goods.
