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 favorite good.
C) each consumer has one strictly preferred good and that consumption and leisure are both normal goods.
D) that 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

This choice captures the assumptions that consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle. This allows for a realistic representation of consumer preferences, as most people enjoy consuming a variety of goods and prefer to have some leisure time. The other choices either do not capture these assumptions or are overly simplistic.

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