Transitivity
Optimum Satisfaction
Consumer's Choices are Consistent
None of these
Answer is Right!
Answer is Wrong!
The correct answer is: C. Consumer’s Choices are Consistent
The other options are all assumptions of consumer’s equilibrium in demand theory.
- Transitivity means that if a consumer prefers good A to good B, and good B to good C, then the consumer must also prefer good A to good C. This is a basic assumption of rational behavior.
- Optimum satisfaction means that the consumer is able to achieve the highest level of satisfaction possible given their budget and the prices of goods. This is achieved when the consumer’s marginal rate of substitution between two goods is equal to the ratio of their prices.
- Diminishing marginal utility means that as a consumer consumes more of a good, the additional satisfaction they receive from each additional unit of the good decreases. This is a basic assumption of consumer behavior.
Consumer’s choices are not always consistent. For example, a consumer might buy a product one day and then return it the next day. This could be due to a number of factors, such as buyer’s remorse, a change in preferences, or a change in the price of the product.
In conclusion, the assumption of consumer’s equilibrium in demand theory that is not always true is C. Consumer’s Choices are Consistent.