When economists assume that people are rational and respond to incentives, they mean:
A) people act in their own self- interest.
B) people act with kindness.
C) people are altruistic.
D) none of the above

Question

Quizplus · Accepted Answer

When economists assume that people are rational and respond to incentives, they mean that people act in their own self-interest. This means that individuals make decisions based on what they think is best for themselves, given the information and options available to them. Rational behavior assumes that individuals weigh the costs and benefits of any action they take, and choose the option that maximizes their own utility or satisfaction. Incentives, such as rewards and punishments, can influence these decisions.

When Economists Assume That People Are Rational and Respond to Incentives