Are Our Consumer Demands Rational? Why or Why Not? How

question 32

Essay

Are our consumer demands rational? Why or why not? How might one sort rational consumer demands from irrational ones?

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Definitions:

Cost-Push Inflation

Inflation caused by an increase in prices of inputs like labour, raw material, etc., leading to a decrease in the supply of these goods.

Raw Materials

Fundamental materials that are used in the production process to create goods and products.

Prices of Raw Materials

The cost of basic materials used in the manufacture of products, which can affect production costs and pricing strategies.

Fiscal Policy

Government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.