What Does the Economic Model of Consumer Behaviour Predict

question 120

Multiple Choice

What does the economic model of consumer behaviour predict?

• A)That consumers will try to earn as much income as they can over their lifetimes.
• B)That consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy.
• C)That consumers will try to accumulate as many goods and services as they can before they die.
• D)That consumers will divide their time between consumption and leisure activities in order to maximise social welfare.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to obtain the present value.

Purchased Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets at the acquisition date.

Market Value

The existing rate at which an asset or service is offered for buy or sell within the marketplace.

Amortize Intangible Assets

The process of systematically reducing the recorded cost of intangible assets over their useful life or legal life, whichever is shorter.