If people care about relative consumption rather than absolute consumption, then:
A)their behavior will be consistent with traditional economic models.
B)there is little need for government intervention in markets.
C)their choices will lead to an efficient allocation of resources.
D)individuals' decisions need not lead to socially optimal outcomes.

Question

Quizplus · Accepted Answer

Traditional economic models assume that people care about absolute consumption rather than how their consumption compares to the consumption of others. If people care about relative consumption rather than absolute consumption, then individuals' decisions need not lead to socially optimal outcomes.

If People Care About Relative Consumption Rather Than Absolute Consumption