In the utility maximising model, consumer preferences are assumed to be transitive.What does this mean?
A)That consumers prefer more of a good to less
B)That consumers have the freedom to change their preferences from time to time
C)That consumers have preferences that are relatively consistent in the time period under consideration
D)That consumers go through cycles in their consumption behaviour

Question

Quizplus · Accepted Answer

Transitivity in consumer preferences means that if a person prefers A to B and B to C, then they also prefer A to C. This consistency in preferences is a fundamental assumption in the utility maximising model. It does not imply anything about consumers preferring more of a good or having the freedom to change their preferences over time. It also does not suggest that consumers go through cyclical consumption behavior.

In the Utility Maximising Model, Consumer Preferences Are Assumed to Be