Question

The theory of consumer behavior assumes that consumers attempt to maximize ________?

1) Utility
2) Profit
3) Satisfaction
4) Wealth

Answer 1

The theory of consumer behavior assumes that consumers attempt to maximize utility, which means they seek to derive the greatest satisfaction or happiness from their consumption choices.

Step-by-step explanation:

The theory of consumer behavior assumes that consumers attempt to maximize utility. This refers to the satisfaction or happiness a consumer gains from consuming a product or service. According to economic principles, consumers look to achieve the highest level of utility possible. The economic analysis implies that while greater consumption of a good typically leads to higher total utility, the additional utility gained diminishes with each extra unit consumed, known as the law of diminishing marginal utility. Consumers are believed to continually adjust their consumption choices to maximize their overall utility within their budget constraints.