The assumption that individuals act rationally implies that people:
A) think only of themselves and disregard the well-being of others.
B) undertake all those activities that do not have any marginal benefit.
C) only consider the costs of an activity to decide whether it is worthwhile.
D) perform charitable deeds only if the cost is high for the benefactor.
E) people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile.

Question

Quizplus · Accepted Answer

The assumption that individuals act rationally implies that people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile. This means that individuals make decisions based on the expected benefits compared to the expected costs, and they will only undertake activities that provide net benefits. This does not necessarily imply that individuals think only of themselves or disregard the well-being of others, or that they only consider costs when making decisions. It also does not imply that individuals will only perform charitable deeds if the cost is high for the benefactor, as rational individuals may also consider the benefits of performing charitable deeds.

The Assumption That Individuals Act Rationally Implies That People