hard · Gre Verbal

Passage: When economists first modeled consumer behavior, they assumed that a person's preferences were fixed and given, and that markets merely revealed them. Marketing, on this view, could inform choices but not manufacture them. Later work grew skeptical. Preferences, some argued, are partly endogenous: repeated exposure, framing, and even the sheer availability of an option can shape what people come to want. If so, the tidy separation between discovering demand and creating it dissolves, and a market that appears simply to satisfy tastes may in fact be quietly forming them. The word 'endogenous' most nearly means

1. Arising from within the system rather than fixed from outside it
2. Practically impossible to measure by any of the conventional economic methods
3. Fundamentally irrational and therefore of essentially no economic relevance at all
4. Essentially identical across every one of the consumers in a given market
5. Determined almost entirely by a given consumer's own innate biology

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