In the goal of consumer optimization, it is assumed that
A) consumption equals disposable income.
B) savings are positive.
C) more is preferred to less.
D) the consumer is rational.
E) the consumer consumes more than his or her disposable income.

Question

Quizplus · Accepted Answer

Consumer optimization assumes that consumers make rational decisions, weighing the costs and benefits of each choice they make. This assumption is important in microeconomics because it allows economists to predict how consumers will respond to changes in the market, such as changes in price or income. While choices A, B, C, and E may be true for some consumers in some circumstances, they are not necessary for the assumption of rationality to hold.

In the Goal of Consumer Optimization, It Is Assumed That