14. Which of the following is not an assumption of the theory of consumer behavi

Question

14. Which of the following is not an assumption of the theory of consumer behavior described in this chapter?

A. The consumer has make decisions within a given budget constraint

B. The consumer experiences diminishing marginal utility from consuming goods

C. The consumer's tastes and preferences continually change within the period studied

D. The consumer aims to get maximum total utility out of a given budget

15. In deciding what to buy, the consumer will choose the good with the:

A. Highest marginal utility

B. Lowest price

C. Highest marginal utility-to-price ratio

D. Lowest marginal utility-to-price ratio

Explanation / Answer

14.

Correct option: C. The consumer's tastes and preferences continually change within the period studied

Reason: As per the theory of consumer demand, it is assumed that consumer tastes and preferences are fixed and do not change.

15.

Correct option: C. Highest marginal utility-to-price ratio

Reason: Consumers maximize consumption benefit by choosing goods with highest MU/P ratio. This means the consumers are getting maximum utility per dollar spent on that good.

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