Asked by Raabiah Azeez on Jul 29, 2024
Verified
The basic theory of consumer behavior is based on which of these assumptions?
A) Consumers have clear preferences.
B) Consumers face budget constraints.
C) Consumers look for combinations of goods that maximize their utility based on information about about preferences, income, and prices.
D) All of the above
Consumer Behavior
The study of how individuals or groups select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires.
Clear Preferences
The concept in decision theory and economics where consumers or decision-makers have well-defined preferences, allowing for consistent choices among sets of alternatives.
Budget Constraints
Constraints that consumers face as a result of limited incomes.
- Determine the essential hypotheses that underpin conventional economic theory related to the behavior of consumers and producers.
Verified Answer
SW
shania wilsonAug 05, 2024
Final Answer :
D
Explanation :
All three assumptions (A, B, and C) are essential components of the basic theory of consumer behavior. Consumers must have clear preferences to make choices between different goods and services. They must also face budget constraints as they consider these choices. Finally, they try to maximize their utility (satisfaction) by making choices based on factors like income, prices, and information about preferences. These assumptions work together to form the foundation for understanding consumer behavior.
Learning Objectives
- Determine the essential hypotheses that underpin conventional economic theory related to the behavior of consumers and producers.