In economics it is assumed that people are rational. To be rational an economic
ID: 1147469 • Letter: I
Question
In economics it is assumed that people are rational. To be rational an economic actor must make sure that
the benefit derived from a choice exceeds some alternative.
his/her economic resources are saved for future use.
her/his resources are not being used fully since that will exhust them.
the benefit derived from a choice exceeds the opportunity cost.
A.the benefit derived from a choice exceeds some alternative.
B.his/her economic resources are saved for future use.
C.her/his resources are not being used fully since that will exhust them.
D.the benefit derived from a choice exceeds the opportunity cost.
Explanation / Answer
Answer . d)
Rationality in economics assumes that the benefit derived from the choice exceeds the opportunity cost i.e it is the beat choice and has greter benefits than the alternative second best choice.
Opportunity cost is the essential relationship between scarcity and choice.