The decision-making process followed by consumers to maximize utility assumes that:

• A. consumers ignore prices when making purchasing decisions
• B. consumers are rational and make choices to maximize their satisfaction given their budget constraints
• C. consumers have unlimited income and face no constraints
• D. consumers always purchase the cheapest available goods regardless of preferences

Answer: (B)

Verified step by step guidance

1. Understand the concept of utility maximization: Consumers aim to get the highest satisfaction (utility) from their purchases given their limited resources.
2. Recognize that consumers face budget constraints, meaning they cannot spend more than their available income.
3. Recall that rational consumers make choices by comparing the marginal utility per dollar spent across different goods to maximize total utility.
4. Note that prices are crucial in this decision-making process because they determine how much of each good a consumer can afford within their budget.
5. Conclude that the assumption is consumers are rational and make choices to maximize their satisfaction given their budget constraints, not ignoring prices or having unlimited income.