Question

Study of how the consumer decides, given his income and many alternative goods to choose from, what to buy when he knows the prices is called study of __________.

• A. consumption
• B. production
• C. distribution
• D. none of these

Answer 1

The correct option is A consumption

The theory of consumption is studied through the indifference map.
The consumption function is created on the basis of the wants of the consumers (and plotted as an indifference curve) and the budget line represents the ability to pay and depends on the consumers' income.