Which of the following statements is NOT correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A rational consumer always chooses the cheapest bundle from the budget set.
A rational consumer picks the bundle that gives her maximum satisfaction, her most preferred bundle. The cheapest bundle need not be the best one.
Option (1) A consumer’s preferences can be represented by an indifference map. — True. An indifference map shows all her preferences as a family of curves.
Option (2) The consumer’s preferences are assumed to be monotonic. — True. Monotonic preferences are an assumption of the theory.
Option (3) A consumer’s preferences can also be represented by a utility function. — True. A utility function is another way to represent preferences.
Option (4) A rational consumer always chooses the cheapest bundle from the budget set. — False. She chooses her most preferred bundle from the budget set.
NCERT (2026-27): “Summary • The consumer’s preferences are assumed to be monotonic. … • A consumer’s preferences, in general, can be represented by an indifference map. • A consumer’s preferences, in general, can also be represented by a utility function. • A rational consumer always chooses her most preferred bundle from the budget set.” “2.3 Optimal Choice of the Consumer … From the bundles which are available to her, a rational consumer always chooses the one which gives her maximum satisfaction. …” |