If we know a consumer's tastes, if we know how much his income (or budget)is, and if we know the price of any one good, then we can predict how much of that good he will buy.

Question

Quizplus · Accepted Answer

Knowing a consumer's tastes, income, and the price of one good does not guarantee prediction of purchase quantity because it ignores the prices of other goods, which can affect substitution and income effects, and individual preferences for variety.

If We Know a Consumer's Tastes, If We Know How