Pranav is deciding what to drink from a cooler that contains cans of soda pop and iced tea. When Pranav chooses iced tea, we assume that he will receive more utility from drinking iced tea than soda pop. Which economic concept is this conclusion based on?
A)Revealed preference
B)Utility minimization
C)Satisfaction scales
D)Rational behavior

Question

Quizplus · Accepted Answer

Revealed preference theory suggests that the choices consumers make reveal their preferences regarding goods, assuming they are aware of their options and constraints. In this case, Pranav's choice of iced tea over soda pop indicates his higher utility or satisfaction from iced tea, as inferred from his action.

Pranav Is Deciding What to Drink from a Cooler That