According to revealed preference a consumer that chooses to smoke cigarettes:
A) derives more utility from smoking than the goods they could have purchased with that same money.
B) derives more happiness from smoking than the goods they could have purchased with that same money.
C) is minimizing their utility given the options available to them.
D) is behaving irrationally.

Question

Quizplus · Accepted Answer

Revealed preference theory states that a person's preferences can be revealed by observing their choices in the market. If a consumer chooses to spend their money on cigarettes rather than other goods, it suggests that they derive more utility or satisfaction from smoking than from the other goods that could have been purchased with that same money. Therefore, choice A is the correct answer.

According to Revealed Preference a Consumer That Chooses to Smoke