Which of the following is a key assumption of rational consumer choice theory?

• A. Consumers make decisions based solely on advertising.
• B. Consumers always purchase the most expensive goods available.
• C. Consumers aim to maximize their utility given their budget constraints.
• D. Consumers ignore prices when making choices.

Answer: (C)

Verified step by step guidance

1. Understand that rational consumer choice theory is based on the idea that consumers make decisions to maximize their satisfaction or utility.
2. Recognize that consumers face budget constraints, meaning they cannot spend unlimited amounts and must choose the best combination of goods within their budget.
3. Identify that the key assumption is consumers aim to maximize their utility given these budget constraints, rather than making decisions based on external factors like advertising or ignoring prices.
4. Note that consumers do not always purchase the most expensive goods; instead, they choose goods that provide the highest utility relative to their cost.
5. Conclude that the correct assumption is: Consumers aim to maximize their utility given their budget constraints.