A key assumption of most economic analysis is that people act rationally, meaning they respond to incentives.

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The assumption that people act rationally and respond to incentives is a cornerstone of economic theory and analysis. This approach is based on the idea that individuals seek to maximize their own self-interest, given the constraints they face, and make decisions based on a cost-benefit analysis of the available options. While this assumption has been subject to some criticism and debate, it remains widely used in modern economic thinking.

A Key Assumption of Most Economic Analysis Is That People