The assumption of rationality in utility theory means consumers:

CA Foundation · Business Economics · MTP · September 2026
The assumption of rationality in utility theory means consumers:
(A) A. Always have unlimited budgets
(B) B. Make choices to maximize satisfaction subject to constraints
(C) C. Ignore prices
(D) D. Spend only on one good

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Make choices to maximize satisfaction subject to constraints

Topics: Theory of Demand and Supply

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