The correct answer is Option (2) → (A)-(II), (B)-(III), (C)-(I), (D)-(IV)
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A) Cardinal utility: This concept of utility suggests that satisfaction derived from consuming goods and services can be measured numerically. Therefore, (A) matches with (II) Level of utility can be expressed in numbers.
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(B) Perfect substitute goods: These are goods that a consumer considers to be identical or interchangeable, and they are willing to trade them at a constant rate. For the simplest case of perfect substitutes (e.g., different brands of a generic product where a consumer is indifferent between them 1:1), the Marginal Rate of Substitution (MRS) is constant, often equal to 1. Therefore, (B) matches with (III) The marginal Rate of Substitution is 1.
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(C) Ordinal Utility: This concept of utility proposes that consumers can rank their preferences for different consumption bundles in order of satisfaction, but they cannot assign specific numerical values to the utility derived. Therefore, (C) matches with (I) Ranking consumption bundles.
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(D) Complimentary goods: These are goods that are consumed together. An increase in the price of one good will lead to a decrease in the demand for its complement. For example, if the price of cars increases, the demand for petrol (a complementary good) will decrease. The statement in (IV) "An increase in the price of one good does not lead to an increase in demand for another good" is consistent with the behavior of complementary goods, as it leads to a decrease in demand, not an increase. Therefore, (D) matches with (IV) An increase in the price of one good does not lead to an increase in demand for another good.
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