Economists describe consumer choice as a constrained optimization problem. What is the consumer trying to do?
A)Maximize income subject to the budget constraint.
B)Maximize the budget constraint.
C)Maximize utility subject to the budget constraint.
D)Minimize spending.

Question

Quizplus · Accepted Answer

The consumer is trying to maximize their utility, which represents their satisfaction or happiness from consuming goods and services. However, they are constrained by their budget, so they need to make choices that will give them the most utility within their budget constraint. Therefore, the correct answer is C, which states that the consumer is trying to maximize utility subject to the budget constraint. The consumer is trying to maximize their utility, or satisfaction, subject to their budget constraint. This means they are trying to choose the combination of goods and services that provides them with the most satisfaction, given the limit of their available income. This is the standard model used in microeconomics to analyze consumer behavior.

Economists Describe Consumer Choice as a Constrained Optimization Problem