Choose the term that matches this definition:A consumer is able to compare and rank all possible baskets. If you give someone a choice between any two possible sets of options, they will be able to rank them.

Question

BlackTom AI · Accepted Answer

In this question, we are matching a formal property of consumer preferences to its description.
Option a: 'Diminishing Marginal Rate of Substitution' refers to how much of one good a consumer will give up to obtain an additional unit of another good while keeping utility constant. It is about rates of substitution, not about the ability to compare all possible baskets. This does not describe the complete-ness of preferences.
Option b: 'Completeness' is the principle that a consumer can compare any two bundles and rank them, meaning for any X and Y, either X is at least as good as Y or Y is at least as good as X (or both if indifferent). This directly matches the given definition about being able to compare and rank all possible baskets.
Option c: 'More is Better' is a common intuition about monotonicity, but it is a qualitative guideline suggesting that more of a good is preferred, not a statement about the ability to compare any two baskets. It does not address the necessary comparability across all pairs.
Option d: 'Transitivity' states that if X is at least as good as Y and Y is at least as good as Z, then X is at least as good as Z. While transitivity is a crucial property of rational preferences, it does not capture the requirement that every pair of baskets can be ranked, which is specifically the completeness condition.
Taken together, the description given aligns with the completeness property, which ensures a complete ranking across all possible bundles. Understanding this helps distinguish it from related concepts like marginal rate of substitution, monotonicity (more is better), and transitivity, each addressing different aspects of preference structure.

ECON 302 AL1 SP25: Inter Microeconomic Theory (Buckley, B)

Choose the term that matches this definition:A consumer is able to compare and rank all possible baskets. If you give someone a choice between any two possible sets of options, they will be able to rank them.

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