Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Read the following passage and answer, question.

A consumer is a rational individual who knows, what is good and bad for him/her. So he always tries to achieve the best to get maximum satisfaction. Thus, the consumer chooses the set of bundles as per his preference which is best for him. The consumer always prefers to move to a point on the highest possible indifference curve given on the budget set. The slope of the budget line is the rate at which the consumer is able to substitute one good for the other in the market.

A rational consumer is the one who has:

Options:

Many set of bundles

Monotonic preference

High budget

Not ready to substitute one good for the other

Correct Answer:

Monotonic preference

Explanation:

A rational consumer is the one who has Monotonic preference.

Explanation:

Monotonic preference refers to a situation where a consumer consistently prefers more of a good to less, holding other goods constant. In other words, a rational consumer is one who prefers more of a good to less when all other factors remain the same. This aligns with the idea that a rational consumer always tries to achieve the best to get maximum satisfaction.