Rational economic decision makers will make a change only if
A)the change is free of risk
B)there are no costs involved
C)their expectations are correct
D)there is no uncertainty about the results of the change
E)the expected marginal benefit exceeds expected marginal cost

Question

Quizplus · Accepted Answer

Rational economic decision makers will only make a change if the expected marginal benefit exceeds the expected marginal cost. This means that they will only make a change if the benefits of the change are expected to outweigh the costs. Choices A-D are incorrect because there is always some level of risk, cost, uncertainty or potential for incorrect expectations involved in any decision.

Rational Economic Decision Makers Will Make a Change Only If