The revealed preference approach can provide more informative comparisons of market baskets if we also assume that the consumer's indifference curves are:
A) concave.
B) convex.
C) incomplete.
D) intransitive.

Question

Quizplus · Accepted Answer

The revealed preference approach assumes that consumers' choices reveal their preferences. Assuming that indifference curves are convex (to the origin) is consistent with the principle of diminishing marginal rate of substitution, which is a fundamental assumption in consumer theory. This convexity implies that as a consumer consumes more of one good, the amount of the other good they are willing to give up to get an additional unit of the first good decreases. This assumption helps in making more informative comparisons of market baskets by reflecting more realistic consumer behavior.

The Revealed Preference Approach Can Provide More Informative Comparisons of Market