Question

Determine which of the following descriptions is true regarding the rational consumer. Makes choices that exhibit...

Determine which of the following descriptions is true regarding the rational consumer.

  • Makes choices that exhibit decreasing utility with the ability to increase consumption

  • Has unlimited resources to consider in making decisions

  • Wants to maximize utility

  • Makes decisions based on an unlimited income

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Which one of the following examples would cause a movement along the demand curve?

  • The price of a product decreases, therefore the quantity demanded increases.

  • The price of a service remains constant, but changes in preferences affect demand.

  • The price of a service remains constant, but a change in income affects demand.

  • The price of a service remains constant, but a change of price in related goods affects demand.

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Homework Answers

Answer #1

Ans: Wants to maximize utility.

Explanation:

Rational behavior of a consumer implises that the minimization of cost and maximization of satisfaction. The objective of a rational consumer is to maximize utility from the least amount of money.

Ans: The price of a product decreases, therefore the quantity demanded increases.

Explanation:

The movement along the demand curve occurs when the price of a good or service changes and other determinants of demand will remain constant.

On the other hand , a chnage in the demand curve occurs when the other determinants of demand change and the price will remain constant.

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