Consumer Preferences in Economics Model

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What can be inferred when a consumer chooses a more expensive market basket over a cheaper one?

The consumer is maximizing their utility

The consumer prefers the chosen market basket (correct)

The consumer has a higher income

The consumer is minimizing their costs

In a revealed preference scenario, what is the implication of choosing a market basket over another?

The consumer is indifferent between the two market baskets

The chosen market basket is preferred to the alternative (correct)

The consumer is not maximizing their utility

The chosen market basket is the cheapest option

If a consumer chooses market basket A over market basket B, and then chooses market basket B over market basket D, what can be inferred about market basket A?

A is preferred to D

A is preferred to all market baskets in the green-shaded area (correct)

A is not preferred to any market baskets

A is not preferred to B

What is the purpose of budget lines in revealed preference analysis?

To illustrate the consumer's possible choices Signup and view all the answers

What is the implication of a corner solution in a college trust fund scenario?

The student is spending the trust fund only on education Signup and view all the answers

If a consumer facing budget line l1 chooses market basket A, and a consumer facing budget line l2 chooses market basket B, what can be inferred about market basket A?

A is preferred to B Signup and view all the answers

What is the assumption of transitivity in consumer preferences?

If a consumer prefers basket A to basket B and basket B to basket C, then the consumer prefers basket A to basket C. Signup and view all the answers

What is the implication of the assumption that 'more is better than less' in consumer preferences?

Consumers always prefer more of any good to less. Signup and view all the answers

What is an indifference curve?

A curve representing all combinations of market baskets that provide a consumer with the same level of satisfaction. Signup and view all the answers

According to the figure, which basket is clearly preferred to basket A?

Basket E Signup and view all the answers

What is the role of additional information in comparing market baskets?

It is necessary to compare market baskets that are not comparable. Signup and view all the answers

What is the implication of the assumption that goods are desirable?

Consumers always prefer more of any good to less. Signup and view all the answers

What concept refers to the idea that consumers can compare and rank all possible market baskets?

Completeness Signup and view all the answers

In consumer behavior theory, what does it mean for a consumer to be 'indifferent' between two market baskets?

They are equally satisfied with either basket. Signup and view all the answers

What is the key assumption about preferences when considering the theory of consumer behavior?

Completeness Signup and view all the answers

What principle states that consumers can easily compare any two market baskets?

Transitivity Signup and view all the answers

Ignoring costs, it is noted that a consumer might prefer steak to hamburger but buy hamburger due to what reason?

Budget constraint Signup and view all the answers

Which of the following is true regarding completeness of preferences in consumer theory?

Consumers can compare all possible baskets. Signup and view all the answers

Consumer Preferences in Economics Model

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