Question

The decision-making process followed by consumers to maximize utility assumes thatA. consumers do not know how much marginal utility they obtain from consuming additional units of various products.B. consumers have unlimited incomes.C. consumers behave rationally, attempting to maximize their satisfaction.D. consumers are unable to rank their preferences.

Answer 1

Answer:

The correct answer is option C.

Explanation:

The decision-making process followed by consumers assumes that consumers are rational beings who are trying to maximize their satisfaction using their limited income.  

So these consumers will consume the good or combination of goods that maximize their total utility derived from the consumption of these goods.

The consumers have limited income, they are aware of the marginal utility they derive from the consumption of an additional unit and they are also able to rank their preferences.