Irrational decision making in markets results in:
A)consistent overproduction.
B)externalities.
C)evidence that the rational rules do not lead to their claimed outcomes.
D)some supply decisions not matching marginal costs, and some demand decisions not reflecting marginal benefits.

Question

Quizplus · Accepted Answer

Irrational decision making in markets means that some supply decisions may be made even though they do not match the marginal costs of producing that product, and some demand decisions may be made even though the marginal benefits do not justify the price paid. This can result in inefficiencies and market distortions. Consistent overproduction (A) may occur if producers are not responsive to changes in demand or price, but this is not necessarily a result of irrational decision making. Externalities (B) refer to costs or benefits that are not reflected in the market price, but these can exist regardless of the rationality of market participants. Evidence that rational rules do not lead to their claimed outcomes (C) may be true in some cases, but it is not a direct result of irrational decision making in markets.

Irrational Decision Making in Markets Results In