The theory of bounded rationality, based on rules of thumb such as "the value of a product is indicated by its price," may result in:
A) diminishing marginal utility.
B) constant marginal utility.
C) an upward-sloping demand curve.
D) an upward-sloping supply curve.

Question

Quizplus · Accepted Answer

Bounded rationality suggests that consumers use simple rules of thumb to make decisions. If consumers believe that higher prices indicate higher value, this could lead to an upward-sloping demand curve, as higher prices might increase perceived value and demand.

The Theory of Bounded Rationality, Based on Rules of Thumb