Economics • Economic BasicsHard
In microeconomics, what does the 'Samuelson's Revealed Preference Theory' fundamentally derive?
A. The shape of the long-run average cost curve without assuming cardinal utility
B. The consumer's demand theorem and indifference curves from observed consumer choice behavior✓ Correct Answer
C. The exact level of market equilibrium under monopolistic competition
D. The rate of technological progress in a competitive industry
💡 Solution & Explanation
Samuelson's Revealed Preference Theory deduces consumer demand theorems and indifference curve slopes purely from observed market choices without needing cardinal utility measurements. Incorrect choices mention concepts like cost curves or industrial equilibrium that belong to firm theory rather than consumer behavior analysis. This approach forms a foundational pillar of modern microeconomic consumer choice theory.
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