Rational economic decision makers will make a change only if: a. their expectations are correct. b. there are no costs involved. c. there is no uncertainty about the results of the change. d. the change is free of risk. e. the expected marginal benefit exceeds expected marginal cost.

Question

Magdalena Hess

Business

8 February, 02:05

Rational economic decision makers will make a change only if: a. their expectations are correct. b. there are no costs involved. c. there is no uncertainty about the results of the change. d. the change is free of risk. e. the expected marginal benefit exceeds expected marginal cost.

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Killian Hubbard · Answer 1

e. the expected marginal benefit exceeds expected marginal cost

Explanation:

Rational decision making refers to deciding in favor of those decisions which yield favorable results. The decision making process takes into account rational, unbiased objective thinking before opting for a course of action.

Marginal benefit refers to how much a consumer is willing to pay to consume an additional unit of output.

Marginal cost refers to the additional cost incurred when another unit of an output is produced.

A rational decision maker makes a change only in the scenario wherein, the marginal benefits derived from consuming a product exceed the marginal cost associated with the product.