A rational decision maker will make a change only if:
A) the marginal benefit from the change exceeds the average benefit from the change.
B) there are no costs involved.
C) the change increases social welfare.
D) there is no uncertainty about the results of the change.
E) the expected marginal benefit exceeds the expected marginal cost.

Question

Quizplus · Accepted Answer

A rational decision maker will weigh the expected marginal benefit against the expected marginal cost. If the expected marginal benefit exceeds the expected marginal cost, then the decision maker should make the change. This takes into account both the potential benefits and costs of the decision, and ensures that the decision maker is making the most efficient use of their resources.

A Rational Decision Maker Will Make a Change Only If