Question

Suppose a consumer is trying to decide how much to spend on transportation and how much to spend on all other ​(non-transportation ​) consumption. The economic model of consumer behavior predicts that the consumer will A. consume an infinite amount of transportation and ​non-transportation consumption. B. consume as much transportation as she can afford without any ​non-transportation consumption. C. consume any combination of transportation and ​non-transportation consumption from among the combinations of transportation and ​non-transportation items she can afford. D. consume as much transportation and as much ​non-transportation consumption as she wants. E. choose the combination of transportation and ​non-transportation consumption that makes her as well off as possible from among the combinations of transportation and ​non-transportation items she can afford.

Answer 1

E. choose the combination of transportation and ​non-transportation consumption that makes her as well off as possible from among the combinations of transportation and ​non-transportation items she can afford.

Step-by-step explanation:

Economics is a study that focuses on how a consumer can best use scarce resources to satisfy their needs.

The individual will need to make an optimal combination of various activities to maximise satisfaction.

In this case a consumer is trying to decide how much to spend on transportation and how much to spend on all other ​(non-transportation) consumption.

He will have to prioritise the levels of transport and non-transport expenses that will make him well off.

For example if transportation is a priority, 80% of available funds can be spent on this, while the remaining 20% can be spent on non-transport activities.