List-I List-II (A) Analysis assumes that level of utility can be expressed in numbers. (I) Cardinal Utility (B) Change in total utility due to consumption of one additional unit of a commodity (II) Law of Diminishing
Marginal Utility.(C) Marginal utility from consuming each additional unit of a commodity declines as its
consumption increases.(III) Marginal Utility (D) The amount of mangoes that the consumer has to forego in order to get an
additional banana, her total utility level being the same.(IV) Marginal rate of
substitution
Choose the correct answer from the options given below:
Economics Utility Concepts Matching Quiz Solution Explained
This question requires matching fundamental concepts in consumer theory, specifically related to utility analysis. Let's break down each item in List-I and find its corresponding definition in List-II.
Matching List-I with List-II Concepts
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(A) Analysis assumes that level of utility can be expressed in numbers.
This statement describes a scenario where economists believe that the satisfaction or utility a consumer derives from a good or service can be measured quantitatively, using numerical values. This approach is known as Cardinal Utility.
- Matches with: (I) Cardinal Utility
-
(B) Change in total utility due to consumption of one additional unit of a commodity
This definition refers to the extra satisfaction gained from consuming one more unit of a product. Economists call this the Marginal Utility.
- Matches with: (III) Marginal Utility
-
(C) Marginal utility from consuming each additional unit of a commodity declines as its consumption increases.
This principle states that as a consumer consumes more and more units of a specific good, the additional satisfaction (marginal utility) obtained from each subsequent unit tends to decrease. This is a core concept known as the Law of Diminishing Marginal Utility.
- Matches with: (II) Law of Diminishing Marginal Utility
-
(D) The amount of mangoes that the consumer has to forego in order to get an additional banana, her total utility level being the same.
This describes the rate at which a consumer is willing to trade one good for another while maintaining the same level of overall satisfaction. This concept is specifically defined as the Marginal Rate of Substitution.
- Matches with: (IV) Marginal rate of substitution
Correct Matching
Based on the explanations above, the correct pairings are:
- (A) - (I) Cardinal Utility
- (B) - (III) Marginal Utility
- (C) - (II) Law of Diminishing Marginal Utility
- (D) - (IV) Marginal rate of substitution
Therefore, the correct option is (A) - (I), (B) - (III), (C) - (II), (D) - (IV).
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