The theory of consumer choice describes the
A) literal process by which people make decisions.
B) irrational decisions made by consumers on a daily basis.
C) implicit, psychological process by which people make explicit, economic decisions.
D) Both a) and b) are correct.

Question

Quizplus · Accepted Answer

The theory of consumer choice focuses on the implicit psychological processes that underlie people's explicit economic decisions. It seeks to explain the principles that guide consumers in making rational trade-offs between competing goods and services, based on their individual preferences, budget constraints, and other factors. It assumes that consumers act to maximize their utility, or satisfaction, subject to these constraints, and that their choices reflect a consistent and rational preference order over different alternatives. Therefore, options A and B are incorrect, since they suggest that consumers make decisions in a literal or irrational manner, respectively. Option D is also incorrect, as it implies that both of these flawed interpretations are valid.

The Theory of Consumer Choice Describes the