GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Utility
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Indifference curve
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Revealed preference
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None of the above
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Detailed explanation-1: -Indifference curve is based on the concept of ordinal utility, which states that only the qualitative differences in levels of satisfaction can be stated by the consumer like Marginal Rate of Substitution.
Detailed explanation-2: -Ordinal measurement of utility refers to the measurement (or expression) of utility in terms ranks like high or low (more or less). Ordinality means that utility can be ranked based on consumer preferences.
Detailed explanation-3: -Indifference Curve Assumptions Usually, the combination with the higher satisfaction level is preferred. The consumer behavior remains constant in the analysis. The utility is expressed in terms of ordinal numbers. Assumes marginal rate of substitution to diminish.