According to Utility Theory, Consumer Purchase Decisions Are Made Such

question 365

Multiple Choice

According to utility theory, consumer purchase decisions are made such that

• A) the value of the ratio of marginal utility to price for the last units purchased and consumed is equal.
• B) the difference between the value of the marginal utility of the last unit purchased and the price paid is maximized.
• C) the total utility of the last unit purchased is equal to the price of that unit.
• D) the total utility from consuming the good is less than the marginal utility of the last unit consumed.

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Definitions:

Attribution Errors

Mistakes in attributing specific behaviors or outcomes to the wrong causes, often leading to misunderstandings or misjudgments about people's actions or intentions.

Halo Effect

A cognitive bias where an observer's overall impression of a person, company, brand, or product influences their feelings and thoughts about that entity's character or properties.

Permanent Change

An alteration in a system or environment that is enduring and not reversible.

Mental Models

Internal representations of the world that people use to understand and interact with their environment.