Utility theory does not assume that:
A)more is better.
B)each incremental unit of consumption brings some additional satisfaction.
C)consumers are able to rank order the desirability of various goods and services.
D)consumers know how much one product is preferred over another.

Question

Quizplus · Accepted Answer

Utility theory assumes that consumers are able to rank order the desirability of various goods and services, and that each incremental unit of consumption brings some additional satisfaction. However, it does not assume that consumers know exactly how much they prefer one product over another, as preferences can be subjective and influenced by a variety of factors. Utility theory does not assume that consumers know how much one product is preferred over another. In fact, one of the main challenges of utility theory is that it can be difficult for consumers to accurately rank the desirability of various goods and services.

Utility Theory Does Not Assume That