Which of the following is NOT one of the four standard assumptions about utility maximization in microeconomics?

• A. Preferences are transitive
• B. Consumers seek to maximize their utility
• C. Consumers have unlimited income
• D. Preferences are complete

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the context of utility maximization in microeconomics. Utility maximization assumes that consumers make choices to maximize their satisfaction or utility given their budget constraints.
2. Step 2: Recall the four standard assumptions about consumer preferences in utility theory: (1) Preferences are complete, meaning consumers can compare and rank all possible bundles; (2) Preferences are transitive, meaning if bundle A is preferred to B, and B to C, then A is preferred to C; (3) Consumers seek to maximize their utility, choosing the most preferred bundle they can afford; (4) Preferences are non-satiated or monotonic, meaning more is preferred to less.
3. Step 3: Analyze the given options and identify which one does not fit these assumptions. 'Consumers have unlimited income' is not a standard assumption because utility maximization typically involves budget constraints, meaning income is limited.
4. Step 4: Conclude that the assumption 'Consumers have unlimited income' is NOT one of the four standard assumptions about utility maximization.
5. Step 5: Summarize that the key assumptions focus on preferences and behavior under constraints, not on unlimited resources.