When we say "let us assume that economic agents are rational," in fact we
A)precisely describe behaviour of economic agents.
B)want economic agents to behave that way.
C)make an assumption to predict the agents' behaviour.
D)impose restrictions on our model.
E)introduce uncertainty into our modelling process.

Question

Quizplus · Accepted Answer

Assuming economic agents are rational is a foundational assumption in many economic models, allowing for the prediction of their behavior based on the premise that they will make decisions aimed at maximizing their utility or profit. This assumption simplifies the modeling process by providing a consistent basis for understanding and predicting decisions.

When We Say "Let Us Assume That Economic Agents Are