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Which of the following is not the assumption of indifference curve analysis
a. rank can be given to various combination
b. marginal rate of substitution is always decreasing
c. ordinal approach
d. utility can be measured in term of money?
a. rank can be given to various combination
b. marginal rate of substitution is always decreasing
c. ordinal approach
d. utility can be measured in term of money?
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Which of the following is not the assumption of indifference curve ana...
Assumption of Indifference Curve Analysis
Indifference curve analysis is based on several assumptions that help in understanding consumer behavior. One of the assumptions of indifference curve analysis is that utility can be measured in terms of money. However, this assumption is not valid in the context of indifference curve analysis.
Rank can be given to various combinations
- One of the key assumptions of indifference curve analysis is that consumers can rank different combinations of goods and services according to their preferences. This assumption forms the basis for constructing indifference curves.
Ordinal approach
- Another assumption is that indifference curve analysis follows an ordinal approach, which means that only the ranking of preferences matters, not the exact measurement of utility. This allows for the use of indifference curves to depict consumer preferences without assigning numerical values to utility.
Utility can be measured in terms of money
- The assumption that utility can be measured in terms of money is not valid in indifference curve analysis. This is because utility is a subjective concept that varies from individual to individual, making it difficult to quantify in monetary terms.
Marginal rate of substitution is always decreasing
- Another assumption of indifference curve analysis is that the marginal rate of substitution (MRS) is always decreasing. This means that as a consumer substitutes one good for another along an indifference curve, the rate at which they are willing to exchange the goods diminishes.
In conclusion, while the assumptions of rank, ordinal approach, and decreasing MRS are fundamental to indifference curve analysis, the assumption that utility can be measured in terms of money is not considered valid in this context.
Indifference curve analysis is based on several assumptions that help in understanding consumer behavior. One of the assumptions of indifference curve analysis is that utility can be measured in terms of money. However, this assumption is not valid in the context of indifference curve analysis.
Rank can be given to various combinations
- One of the key assumptions of indifference curve analysis is that consumers can rank different combinations of goods and services according to their preferences. This assumption forms the basis for constructing indifference curves.
Ordinal approach
- Another assumption is that indifference curve analysis follows an ordinal approach, which means that only the ranking of preferences matters, not the exact measurement of utility. This allows for the use of indifference curves to depict consumer preferences without assigning numerical values to utility.
Utility can be measured in terms of money
- The assumption that utility can be measured in terms of money is not valid in indifference curve analysis. This is because utility is a subjective concept that varies from individual to individual, making it difficult to quantify in monetary terms.
Marginal rate of substitution is always decreasing
- Another assumption of indifference curve analysis is that the marginal rate of substitution (MRS) is always decreasing. This means that as a consumer substitutes one good for another along an indifference curve, the rate at which they are willing to exchange the goods diminishes.
In conclusion, while the assumptions of rank, ordinal approach, and decreasing MRS are fundamental to indifference curve analysis, the assumption that utility can be measured in terms of money is not considered valid in this context.
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Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money?
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Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money?.
Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not the assumption of indifference curve analysis a. rank can be given to various combination b. marginal rate of substitution is always decreasing c. ordinal approach d. utility can be measured in term of money?.
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