We assume that the representative consumer's preferences exhibit the properties that
A) they be convex and that more is always preferred to less.
B) more is always preferred to less and that each consumer has one strictly favourite good.
C) each consumer has one strictly preferred good and that consumption and leisure are both normal goods.
D) consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle.
E) more is always preferred to less and that consumers do not like diversity in his or her consumption bundle.

Question

Quizplus · Accepted Answer

Choice D includes both properties of normal goods and the preference for diversity in consumption. It is a more comprehensive assumption that can better explain consumer behavior. Choices A, B, and E are either incomplete or too restrictive to capture the complexities of consumer preferences. Choice C only includes one property of normal goods and does not account for the preference for diversity in consumption.

We Assume That the Representative Consumer's Preferences Exhibit the Properties