Question

Which of followings is not a basic assumption of the consumer preferences?

A) Transitivity
B) Completeness
C) None of the above
D) Sensitivity
E) More is better than less

Answer 1

The correct answer is D) Sensitivity. Sensitivity is not a basic assumption of consumer preferences.

Step-by-step explanation:

The correct answer is D) Sensitivity. Sensitivity is not a basic assumption of consumer preferences. The four basic assumptions of consumer preferences are:

1. Transitivity: Consumers have consistent preferences and can rank different choices.
2. Completeness: Consumers are able to compare and make choices between different options.
3. Sensitivity: Consumers respond to changes in price and income by adjusting their preferences and consumption.
4. More is better than less: Given two options, consumers prefer having more of a good rather than less.

Based on these assumptions, sensitivity does not fit as a basic assumption of consumer preferences.