The Revealed Preference Theory deduces the inverse price-quantity relationship from

The correct answer is C. Observed behavior of the consumer.

Revealed preference theory is a microeconomic theory that explains how consumers make choices under conditions of scarcity. It is based on the idea that consumers will always choose the combination of goods and services that gives them the most satisfaction, or utility.

The theory deduces the inverse price-quantity relationship from the observed behavior of consumers. If the price of a good goes up, consumers will buy less of it. This is because they can now get more satisfaction from buying other goods.

The other options are incorrect.

• Assumption of indifference is a concept in consumer theory that states that consumers are indifferent between two bundles of goods if they are equally satisfied with both bundles. This assumption is used to derive the indifference curve, which is a graphical representation of a consumer’s preferences.
• Postulate of utility maximization is a concept in consumer theory that states that consumers will always choose the combination of goods and services that gives them the most satisfaction, or utility. This postulate is used to derive the consumer’s demand curve.
• Introspection is the act of looking inward into one’s own mind to examine one’s thoughts, feelings, and motives. It is not a reliable way to understand consumer behavior because consumers are often not aware of their own motives.