SOA-ERM 2025 Spring Exam With Complete Solutions
100% Verified
The assumption that preferences are complete requires the consumer
a) to rank any two baskets.
b) to say that basket C is preferred to basket A if basket B is preferred to basket A and
basket C is preferred to basket B.
c) to rank a basket with more units of all goods higher than a basket with fewer units of
all goods.
d) to have a diminishing marginal rate of substitution. - ANSWER a
Assume that two baskets and lie on the same indifference curve. Assume that basket
contains more of good than basket but less of good than basket. As the consumer
moves down and to the right (from basket to basket ) along his indifference curve, total
utility
a) increases.
b) remains constant.
c) decreases.
d) is ambiguous. - ANSWER b
onsumer preferences:
a) are fixed exogenously and unchanging in reality.
b) indicate how a consumer would rank any two possible baskets of goods, taking into
account her budget constraint.
c) indicate how a consumer would rank any two possible baskets of goods, taking into
account the current prices of those goods.
d) indicate how a consumer would rank any two possible baskets of goods, assuming
that the baskets were available to the consumer at no cost. - ANSWER d
,If a consumer is unable two compare two baskets, then this consumer's preferences
violate which of the following key assumptions?
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER a
Indifference curves that intersect are said to be:
a) Irrational.
b) Non-transitive.
c) Inconsistent with our basic assumptions about preferences.
d) Complete, but not consistent. - ANSWER c
If I prefer steak to burritos, burritos to pasta and pasta to steak:
a) My preferences are irrational.
b) My preferences violate the transitivity assumption.
c) My preferences violate the "more is better assumption.
d) I must have been exhibiting diminishing marginal utility. - ANSWER b
Assume that a consumer prefers watching Yu-Gi-Oh to watching Teen Titans, and that
this same consumer prefers watching Teen Titans to watching Sponge Bob. Further
assume that this same consumer states, "I would prefer to watch Sponge Bob to
watching Yu-Gi-Oh." This consumer's preferences violate which of the following key
assumptions?
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER b
, If a consumer would rather eat three bars of chocolate than four bars of chocolate, this
consumer's preferences violate which of the following key assumptions?
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER c
Wendy is very indecisive. She can't decide whether she should go on a cruise or spend
her vacation at her friend's home. Her preferences violate the assumption of:
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER a
he assumption that preferences are transitive requires the consumer
a) to rank any two baskets.
b) to say that basket is preferred to basket if basket is preferred to basket and basket is
preferred to basket.
c) to rank a basket with more units of all goods higher than a basket with fewer units of
all goods.
d) to have a diminishing marginal rate of substitution. - ANSWER b
11. Jacob's estimated utility from pizza is given by 3Z, where Z is the number of pizzas
he consumes per month. We can say that:
a) Jacob likes pizza better than steak.
b) Jacob is a vegetarian.
c) Jacob's preferences are transitive.
d) Jacob's marginal utility from pizza is constant. - ANSWER d
100% Verified
The assumption that preferences are complete requires the consumer
a) to rank any two baskets.
b) to say that basket C is preferred to basket A if basket B is preferred to basket A and
basket C is preferred to basket B.
c) to rank a basket with more units of all goods higher than a basket with fewer units of
all goods.
d) to have a diminishing marginal rate of substitution. - ANSWER a
Assume that two baskets and lie on the same indifference curve. Assume that basket
contains more of good than basket but less of good than basket. As the consumer
moves down and to the right (from basket to basket ) along his indifference curve, total
utility
a) increases.
b) remains constant.
c) decreases.
d) is ambiguous. - ANSWER b
onsumer preferences:
a) are fixed exogenously and unchanging in reality.
b) indicate how a consumer would rank any two possible baskets of goods, taking into
account her budget constraint.
c) indicate how a consumer would rank any two possible baskets of goods, taking into
account the current prices of those goods.
d) indicate how a consumer would rank any two possible baskets of goods, assuming
that the baskets were available to the consumer at no cost. - ANSWER d
,If a consumer is unable two compare two baskets, then this consumer's preferences
violate which of the following key assumptions?
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER a
Indifference curves that intersect are said to be:
a) Irrational.
b) Non-transitive.
c) Inconsistent with our basic assumptions about preferences.
d) Complete, but not consistent. - ANSWER c
If I prefer steak to burritos, burritos to pasta and pasta to steak:
a) My preferences are irrational.
b) My preferences violate the transitivity assumption.
c) My preferences violate the "more is better assumption.
d) I must have been exhibiting diminishing marginal utility. - ANSWER b
Assume that a consumer prefers watching Yu-Gi-Oh to watching Teen Titans, and that
this same consumer prefers watching Teen Titans to watching Sponge Bob. Further
assume that this same consumer states, "I would prefer to watch Sponge Bob to
watching Yu-Gi-Oh." This consumer's preferences violate which of the following key
assumptions?
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER b
, If a consumer would rather eat three bars of chocolate than four bars of chocolate, this
consumer's preferences violate which of the following key assumptions?
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER c
Wendy is very indecisive. She can't decide whether she should go on a cruise or spend
her vacation at her friend's home. Her preferences violate the assumption of:
a) Completeness.
b) Transitivity.
c) More is better.
d) Both completeness and transitivity. - ANSWER a
he assumption that preferences are transitive requires the consumer
a) to rank any two baskets.
b) to say that basket is preferred to basket if basket is preferred to basket and basket is
preferred to basket.
c) to rank a basket with more units of all goods higher than a basket with fewer units of
all goods.
d) to have a diminishing marginal rate of substitution. - ANSWER b
11. Jacob's estimated utility from pizza is given by 3Z, where Z is the number of pizzas
he consumes per month. We can say that:
a) Jacob likes pizza better than steak.
b) Jacob is a vegetarian.
c) Jacob's preferences are transitive.
d) Jacob's marginal utility from pizza is constant. - ANSWER d
