Harry tells you that he prefers Pepsi to Coke, Coke to 7-UP, and 7-UP to Pepsi. This violates what assumption made when analyzing consumer preferences?
A. that consumers are able to choose among all the combinations of goods and services available
B. that consumers are rational
C. that more is better
D. that there is a diminishing marginal rate of substitution
Answer: B
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As one moves down a straight-line demand curve, the elasticity decreases.
Answer the following statement true (T) or false (F)
Countries with stable inflation rates tend to have ________ SAS curves
A) flat B) steep C) flat or steep D) None of the above. All countries have SAS curves with almost the same slope.
Regardless of market structure, all firms
A) consider the actions of rivals. B) maximize profit by setting marginal revenue equal to marginal cost. C) produce a differentiated product. D) have the ability to set price.
A rightward shift in the aggregate demand curve can be caused by an increase in:
a. the price level. b. business investment spending. c. taxes. d. production costs.