Question 23M.1.HL.TZ2.1b
| Date | May 2023 | Marks available | [Maximum mark: 15] | Reference code | 23M.1.HL.TZ2.1b |
| Level | HL | Paper | 1 | Time zone | TZ2 |
| Command term | Discuss | Question number | b | Adapted from | N/A |
Using real-world examples, discuss the assumption that consumers always seek to maximize their utility.
[15]
Refer to Paper 1 markbands for May 2022 forward, available under the "My tests" tab > supplemental materials.
Answers may include:
- Terminology: utility.
- Explanation: of the assumption in terms of consumer rationality, perfect information and the maximization of total utility.
- Diagram: not needed for this question.
- Synthesis (discuss): a challenge to the assumption in terms of the limitations to rational consumer choice such as imperfect information, bounded rationality, bounded selfishness, biases – rule of thumb, anchoring and framing, availability; consideration of the word “always”.
- Examples: real-world examples of consumers acting rationally or where there are limitations to their ability to do so.
N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Part (b) 15 marks
This question proved a challenge for a number of candidates who seemed to have little understanding of relevant theory, some tried to make the response about negative externalities of consumption rather than looking at the factors such as imperfect information, bounded rationality and bias and so forth that might restrict an individual consumer s effort to maximize utility. Good candidates paid attention to the use of the word "always" in the question. Many responses were limited in detail and would have benefited from a more considered use of real-world examples. Diagrams were not expected for this question.
