We assume that the representative consumer's preferences exhibit the properties that
A) they evolve over time and that more is always preferred to less.
B) more is preferred to less and that the consumer prefers diversity.
C) the consumer likes diversity and that more is sometimes preferred to less.
D) more is sometimes preferred to less and that consumption and leisure are both normal goods.

Question

Quizplus · Accepted Answer

The given properties best fit the assumption of consumer preferences for diversity and the preference for more over less. The other options either don't include a preference for diversity (options A and D) or include conflicting assumptions such as the assumption that preferences evolve over time (option A) which could not be modelled.

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