According to the utility theory, a glass of milk mixed with Milo (Nestlè's drink mix), will be preferred to milk or Milo alone.Identify this assumption on preference.
A)Completeness
B)More-is-better
C)Rationality
D)Convexity
E)Monotonicity

Question

Quizplus · Accepted Answer

The assumption that a mixture of milk and Milo is preferred over either component alone is an example of the convexity assumption in utility theory. Convexity implies that combinations or mixtures of goods can provide higher utility than extreme amounts of either good alone, reflecting a preference for diversity or balance.

According to the Utility Theory, a Glass of Milk Mixed