3 basic assumptions of the neoclassical utility theory of consumer behavior

1. Consumers act rationally: Consumers behave in a way that seeks to maximize the utility derived from the consumption of a good. This assumes that individuals have rational preferences that enable them to correctly identify the best choice. 2. Consumers have perfect information: Consumers have an accurate understanding of the available market and the prices associated with the different products they have access to. This means that consumers have complete information about the cost and benefits of every possible product they could purchase. 3. Consumers have limited financial resources: Consumers make decisions regarding the allocation of resources in order to satisfy their wants and needs. Therefore, they have to consider the costs associated with the purchase of products and optimize the usage of their financial resources.