If a consumer prefers basket A to basket B and basket B to basket C, then the consumer also prefers A to C. This assumption is called:
A) completeness.
B) transitivity.
C) nonsatiation.
D) rationality.

Question

Quizplus · Accepted Answer

The assumption described in the question is an example of transitivity, which states that if A is preferred to B and B is preferred to C, then A must be preferred to C. Completeness (A) is the assumption that consumers have preferences for all possible combinations of goods. Nonsatiation (C) is the assumption that consumers always prefer more of a good to less. Rationality (D) is the assumption that consumers make choices that maximize their satisfaction or utility. While all of these assumptions are important in modeling consumer behavior, transitivity is the one that applies to the scenario presented in the question.

If a Consumer Prefers Basket a to Basket B and Basket