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:

Cooperation

The process of working together towards a common goal or benefit.

Negotiation

The process in which two or more parties aim to reach a mutually acceptable agreement through dialogue and compromise.

Competition

The activity or condition of striving to gain or win something by defeating or establishing superiority over others.

Confrontation

A direct engagement or encounter between individuals or groups over a disagreement or conflict.