📚 Learning Guide
Consumer Utility Maximization
easy

If a consumer is consistently choosing to buy less of a good despite its price decreasing, what could be a likely underlying cause of this behavior?

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Choose the Best Answer

A

The consumer's marginal utility from that good has decreased.

B

The consumer prefers to spend all their budget on this good.

C

The quality of the good has improved, making it more desirable.

D

The price decrease has made the good less valuable to the consumer.

Understanding the Answer

Let's break down why this is correct

Answer

When a consumer buys less of a good even though its price is going down, it might be because their preferences or needs have changed. For example, if a person usually buys a lot of soda but decides to drink more water for health reasons, they will buy less soda regardless of the lower price. This change in behavior shows that the consumer is focusing on what makes them happier or healthier rather than just the cost. Additionally, the consumer may have found substitutes that they enjoy more, which means they will choose those instead of the cheaper good. Overall, the consumer is trying to maximize their satisfaction based on their new preferences, not just the price of the product.

Detailed Explanation

When the price goes down, people might buy less if they enjoy it less. Other options are incorrect because Some might think the consumer wants to spend all their money on this item; It's easy to think that better quality means more buying.

Key Concepts

Consumer Utility Maximization
Marginal Utility
Consumer Behavior
Topic

Consumer Utility Maximization

Difficulty

easy level question

Cognitive Level

understand

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