A utility function is a mathematical function that assigns values to consumption bundles to represent the:
A) consumer's income.
B) consumer's preferences.
C) marginal rate of substitution.
D) prices of the goods in the consumption bundle.

Question

Quizplus · Accepted Answer

A utility function represents the consumer's preferences by assigning values to different consumption bundles based on the satisfaction or utility they provide. Therefore, choice B is the correct option. A consumer's income is not represented by a utility function, so option A is incorrect. Marginal rate of substitution (MRS) is a concept used to analyze an individual's preferences, but it is not the same as a utility function, so option C is also incorrect. Finally, a utility function does not represent the prices of the goods in the consumption bundle, so option D is incorrect.

A Utility Function Is a Mathematical Function That Assigns Values