Rational decision making 1.2.1

Question 1

what is rational decision making

Answer 1

Economists assume that economic agents are rational.
To behave “rationally” means to carefully weigh up all of the costs and benefits of an action and then to attempt to achieve the best possible outcome (maximise!)

Question 2

what are consumers assumed to be

Answer 2

utility maximisers.

Question 3

what are firms assumed to be

Answer 3

profit maximisers

Question 4

what are Governments are assumed to be

Answer 4

social welfare maximisers