When Attempting to Explain Why a Consumer Purchases a Ford

question 72

Multiple Choice

When attempting to explain why a consumer purchases a Ford automobile instead of a Honda automobile or a Compaq computer instead of an IBM computer,an economist would assert:

• A)that the consumer is making a decision based on what gives him maximum utility.
• B)that everyone knows Hondas are superior to Fords; the consumer cannot possibly be maximizing his utility.
• C)that everyone knows IBM computers are superior to Compaq computers; the consumer may be maximizing his utility at the margin,but is not maximizing total utility.
• D)that there is no standard explanation for consumer choices because consumers have varied tastes and preferences.
• E)that since rationality is bounded by lack of information,a consumer purchases goods based on convenience than on utility maximization.

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Definitions:

Due Date

The specific day by which a payment, task, or obligation must be completed or submitted.

Remittance

The action of sending money in payment or as a gift.

Discount Period

A set timeframe in which a buyer can pay less than the full invoice amount if they pay before the period expires.

Discount Date

The date on which a bill or note is discounted, determining the time left until its maturity and the amount to be received.