Explanation​:
Satisficing is followed when there is bounded rationality.

Options A, C, and D are assumptions of rational consumer choice

Option A: as the consumer can make a rational choice only if perfect information about the products is available.

Option C: as a consumer always prefers to have more of a good rather than less of it.

Option D: a rational consumer buys a combination of goods within a given money limit that maximises his utility.

Explanation​:
Bounded rationality, in the context of behavioral economics, refers to the idea that human decision-making is limited by cognitive constraints, such as information overload, time limitations, and cognitive biases.

It suggests that individuals do not always make fully rational decisions as assumed by classical economic theory, but instead make choices that are satisfactory or "good enough" given the constraints they face.

Choices A and D are also examples of the limitations of the theory of rational consumer choice, but they are not relevant in this scenario.

Choice B is an assumption supporting the theory of rational consumer choice.

Key idea​:

• Bounded rationality means that consumers behave in a rational manner only within limits.

Explanation​:
Statement I is incorrect because maximising utility is a characteristic of a perfectly rational consumer.

Statement II is correct because a consumer is behaving rationally only within limits, so instead of maximising utility, consumers satisfice.

Statement III is correct because consumers cannot process all information to behave in a rational manner.

Statement IV is incorrect because consumers typically have insufficient information.

A

Explanation​:
If quantity demanded changes by a greater percentage than an increase of income, it signifies that a good is a luxury good to that consumer.

On the Engel curve above, this relationship occurs when the slope of the curve is greater than 45$°$, so Choice A is an income elastic, or luxury, good.

Points B, C, and D are not luxury goods because they have slopes less than 45°.

Key ideas​:

• A decrease in demand refers to a leftward shift of the demand curve.
• Only non-price determinants of demand can shift the demand curve.

Explanation​:
B is correct, as petrol and cars are complementary goods. If the price of petrol goes up, fewer people will want to buy cars (used or otherwise).

Choice A is incorrect because a rise in the price of used cars would cause a decrease of quantity demanded—a movement along the demand curve—not a shift of the demand curve.

Choices C and D are both incorrect as public transit and new cars are substitutes for used cars. Therefore, a growing distaste for public transit and a rise in price for new cars should both increase demand for used cars.

Explanation​:
Allocative efficiency occurs when the market is in equilibrium. Consumer surplus is the triangle created by the demand curve, the price, and the vertical axis.

Therefore, if the market is allocatively efficient, the price is $12 and the consumer surplus is the area of the green triangle:

[(26−12) × 13]/2=$91

The following answers are incorrect because they refer to:

• (Choice A) consumer spending ($12\times 13$) when the price is $\text{\$}$12
• (Choice B) consumer surplus when the price is $\text{\$}$8
• (Choice D) producer surplus

Explanation​:

Choice I is incorrect: the number of substitutes for oil relates to PED, not PES

Choice II is correct: the time needed to adjust oil production inputs means that oil production does not respond to changes in price, thus making oil’s PES more inelastic

Choice III is incorrect: the cost of production is not a factor affecting PES

Choice IV is incorrect: a product being a necessity relates to PED, not PES

Explanation​:
Statement I: A more durable product will often lead to supply being more price-elastic as producers can store inventory when prices are too low. Consequently, an increase in price causes a proportionally larger increase in quantity supplied.

Statement II: Electronics are often assembled in factories and production can be increased in a relatively short period of time.

Statement III: Availability of substitutes is a determinant of PED, not PES.

Statement IV: The degree of luxury/necessity is a determinant of PED, not PES.

Explanation​:
Demand for cigarettes is likely to be inelastic because of their addictive and habit-forming nature, so most of the tax burden will likely be shifted to consumers in the form of higher prices.

Choices A, B and C are all possible outcomes of high indirect taxes on cigarettes.

Explanation​:
Anchoring bias occurs when individuals heavily rely on the first piece of information they receive, influencing subsequent judgments or decisions. Awareness of anchoring bias can help individuals make more objective decisions by considering multiple sources of information and independently assessing the property's value, leading to mutually beneficial agreements.

Although choices B, C, and D are biases that prevent rational consumer choice, they are irrelevant in this scenario.

Although Choices A, B, and C are biases that prevent rational consumer choice, they are not relevant in this scenario.

Explanation​:
The diagram shows an increase of quantity supplied, which is a movement along the supply curve, not a shift. An increase in quantity supplied is caused by an increase in demand.

Choices A, B, and D are incorrect because they shift the supply curve.

• Choices A and D shift the supply curve to the left
• Choice B shifts the supply curve to the right.

Explanation​:
If bread prices are expected to rise, firms will hoard grain in anticipation, reducing supply.

Choice A is incorrect, as a change in demand for rice has no impact on the supply of bread.

Choices B and D are incorrect, as improvements in technology and favourable weather would both increase supply and cause the supply curve to shift to the right.

Explanation​:
A vertical supply curve indicates that supply is perfectly inelastic, meaning quantity supplied is fixed, and supply does not respond at all to changes in price. In this case, PES = 0. The number of tickets at a sporting event will likely be fixed as the stadium will have a fixed number of seats and a maximum capacity.

Choices A and B represent products that are likely to have relatively price-elastic supply as they can be stored.

Choice D represents a product that is likely to have relatively price-inelastic supply due to the time it takes to extract, refine and process oil.

Explanation​:
Availability bias refers to information which is recently available. People rely heavily on recent information and thus don't act rationally.

Options A, B, and D are other ideas related to behavioural economics.

• Option A: anchoring means making decisions on the first piece of information that people come across.
• Option B: framing deals with the way choices are presented to the consumers.
• Option C: a rule of thumb means making decisions based on experience.

Explanation​:
The ability to store a product affects its PES. Perishable products have lower PES, and durable products have higher PES.

Choices B, C, and D are all determinants of price elasticity of demand (PED), not PES.

The correct answer is Choice A. Prices act as signals, indicating resource scarcity when prices are high, or resource abundance when prices are low.

These answer choices do not specifically address the concept of signalling in the context of the price mechanism:

• Choice B refers to the law of demand.
• Choice C refers to the “incentive” function of price.

Choice D is incorrect because the price mechanism refers to market forces—demand and supply—not government intervention.

Explanation​:
Bounded self-control is the idea that individuals, even when they know what they want, may not be able to act in their own interests. Other examples of bounded self-control include evidence of procrastination, and submitting to temptation.

Although choices A, C, and D are examples of the limitations of the assumptions of rational consumer choice, they are not relevant to the phenomenon of impulse buying.

Explanation​:
Statement I: In the short run, one or more factors of production are fixed. The long run is defined as the amount of time that needs to pass in order for all factors of production to be changeable.

Statement II: The marginal product curve intercepts the average product curve (AP) at the highest point of AP.

Statement III: Marginal Cost = ΔTC/Δq​

Explanation​:
All three statements can be true of a free-market economy. Resources are owned, controlled and managed by private individuals. Income distribution is unequal as the factors are paid on the basis of productivity.

Explanation​:
In the context of choice architecture, default choice is a choice made by default wherein the consumer does not do anything and would need to make a deliberate effort to select a different choice.

Choice B is a mandated choice.
Choice C is a restricted choice.
Choice D does not relate to choice architecture.

Explanation​:
Choice D is not relevant to the choice architect as it is personalized and differs from each individual consumer to the next.

Choice architecture shapes decision-making through the presentation and structure of choices. It includes default choice, where a pre-selected option is favored if no active decision is made (Choice A), mandated choice which requires active selection (Choice B), and restricted choice which narrows down options (Choice C).