EC1P1 - 1) The Wellbeing of Nations || with Accurate Answers 100%.
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EC1P1 - 1) The Wellbeing of Nations
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EC1P1 - 1) The Wellbeing Of Nations
What is revealed preference? correct answers Revealed preference: if people chose alternative A instead of B, it is because they preferred it. Their well being was higher with A than B.
What is a utility/welfare function? correct answers A map of the enjoyment of goods into a measure of well bei...
EC1P1 - 1) The Wellbeing of Nations || with Accurate
Answers 100%.
What is revealed preference? correct answers Revealed preference: if people chose alternative A
instead of B, it is because they preferred it. Their well being was higher with A than B.
What is a utility/welfare function? correct answers A map of the enjoyment of goods into a
measure of well being. If same utility, then indifferent. If more utility, then prefer that situation
SHows which bundle of goods we prefer
How is theta in the function determined? correct answers - Can be found by looking at a
consumer's revealed preference
- Theta = share of income spent on c good
What is the assumption about consumption and utility? correct answers Higher consumption
increases welfare/utility.
What is the difference between cardinal and ordinal? Can utility be measured? correct answers
Cardinal = number of units. Ordinal shows ranking in a way (e.g. which is better) but doesn't
show a certain quantity. Utility cannot be measured in units
What is the equivalent variation consumption measure of welfare? correct answers - How much
more consumption do we need to reach a certain level of utility
- Allows a cardinal comparison in utility.
What is the ceteris paribus principle? correct answers All else equal, higher GDP raises welfare
as u(c,o) increases with higher c
Why is GDP a good measure of wellbeing? correct answers - Positively correlated with omitted
variables
- Can be used for an ordinal comparison of welfare but not cardinal
When can we not say if welfare has improved over time - problem with measuring welfare with
GDP? correct answers If c in the future is greater than before but o is smaller.
What is the problem when using welfare functions over time? correct answers The ommited
variable - Want to measure u(c,o) but we can only observe c and not o
When will ratios of GDP give accurate estimates of Wellbeing in an ordinal sense? correct
answers If other factors that plausibly raise wellbeing, are positively correlated with GDP
What are factors (o) that could affect wellbeing? correct answers Health, electricity, education,
happiness, nutrition, human rights
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