ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Question: QUESTION 24 The theory of consumer behavior assumes that consumers can compare and rank all possible market baskets. This assumption is called: completeness. transitivity. nonsatiation (more is preferred to less).

Detailed explanation-2: -Assumptions concerning consumer behaviour: There needs and wants are greater than their income. Consumers seek to get maximum utility/satisfaction when buying goods. Consumers will act rationally ie. If they see two identical goods in two different shops, they will buy the cheaper of the two goods.

Detailed explanation-3: -In other words, consumers can compare and rank all possible baskets. Thus, for any two market baskets A and B, a consumer will prefer A to B, will prefer B to A, or will be indifferent between the two. By indifferent we mean that a person will be equally satisfied with either basket.

Detailed explanation-4: -The theory of consumer behavior assumes that consumers attempt to maximize: total utility. A consumer’s demand curve for a product is downsloping because: marginal utility diminishes as more of a product is consumed.

Detailed explanation-5: -Consumer theory is a concept that deals with how people choose to spend their money, provide their tendency and budget restrictions. As a part of microeconomics, consumer theory manifests how people make choices, provide restraints, their income, and the prices of commodities and services.