Classical economic theory maintains that consumers make purchasing decisions through rational cost-benefit analysis, seeking to maximize utility while...
GMAT Information and Ideas : (Ideas) Questions
Classical economic theory maintains that consumers make purchasing decisions through rational cost-benefit analysis, seeking to maximize utility while minimizing expense. Recently, however, behavioral economists have documented numerous instances where consumers consistently pay premium prices for products with identical functionality when those products carry environmental sustainability claims, even when the environmental benefits are minimal or unverified. These observations may suggest that _____
Which choice most logically completes the text?
environmental sustainability claims have no measurable impact on consumer purchasing patterns.
cost-benefit analysis becomes more precise when environmental considerations are included in the calculation.
non-rational factors play a larger role in consumer decision-making than classical theory predicts.
rational consumers can easily distinguish between legitimate and superficial environmental marketing claims.
Step 1: Decode and Map the Passage
Part A: Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| 'Classical economic theory maintains that consumers make purchasing decisions through rational cost-benefit analysis, seeking to maximize utility while minimizing expense.' |
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| 'Recently, however, behavioral economists have documented numerous instances where consumers consistently pay premium prices for products with identical functionality when those products carry environmental sustainability claims,' |
|
| 'even when the environmental benefits are minimal or unverified.' |
|
| 'These observations may suggest that _____' |
|
Part B: Provide Passage Architecture & Core Elements
Main Point: Behavioral economists have found evidence that challenges classical economic theory's assumption of rational consumer decision-making.
Argument Flow: The passage starts with classical economic theory that assumes rational consumer behavior, then presents contradictory evidence from behavioral economists showing consumers making seemingly irrational choices, leading to a conclusion about what this evidence suggests about the nature of consumer decision-making.
Step 2: Interpret the Question Precisely
This is a fill-in-the-blank question asking us to choose the best logical connector. The answer must create the right relationship between what comes before and after the blank.
Step 3: Prethink the Answer
- The passage shows us that classical theory says consumers are rational cost-benefit analyzers, but behavioral economists found evidence of consumers paying more for products with the same functionality just because they have environmental claims - even when those claims are minimal or unverified
- This suggests that consumers aren't actually following the rational cost-benefit analysis that classical theory assumes
- The correct answer should indicate that classical economic theory's assumption about rational decision-making doesn't fully explain consumer behavior, and that other factors (non-rational ones) play a significant role
environmental sustainability claims have no measurable impact on consumer purchasing patterns.
✗ Incorrect
- Claims environmental claims have 'no measurable impact' on purchasing which directly contradicts the evidence that consumers 'consistently pay premium prices' for these products
cost-benefit analysis becomes more precise when environmental considerations are included in the calculation.
✗ Incorrect
- Suggests cost-benefit analysis becomes 'more precise' when including environmental factors but misses the point entirely - the issue isn't precision, it's that consumers aren't actually doing rational cost-benefit analysis
non-rational factors play a larger role in consumer decision-making than classical theory predicts.
✓ Correct
- Directly addresses the gap between classical theory (rational analysis) and observed behavior (paying premiums for minimal benefits)
- 'Non-rational factors' perfectly explains why consumers would pay more despite identical functionality and unverified claims
rational consumers can easily distinguish between legitimate and superficial environmental marketing claims.
✗ Incorrect
- Claims consumers 'can easily distinguish' between legitimate and superficial claims but contradicts the evidence that they pay premiums even for 'minimal or unverified' benefits