6

Set 4: Inferences (Advanced)

Explanation

Answer: B

PASSAGE

Economists distinguish between 'stated preferences'—what people say they value—and 'revealed preferences'—what their behavior shows they value. Surveys may find that consumers claim to prioritize sustainability, but purchasing data often shows they buy cheaper options. The discrepancy raises questions about whether attitudes or actions better represent true preferences.

What conceptual problem does the discrepancy pose?

A. Surveys always accurately capture preferences.
B. Defining what constitutes a 'true' preference is complicated when self-reports and behavior diverge.✓ Correct
C. Purchasing data is irrelevant to understanding preferences.
D. Consumers never care about sustainability.

Detailed Explanation

'Attitudes or actions' better represent 'true' preferences = divergence complicates definition.

Key Evidence:

• "raises questions about whether attitudes or actions better represent true preferences"

Why others are wrong: A (Surveys diverge from behavior.), C (Purchasing data reveals preferences.), D (They claim to prioritize it in surveys.).

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