Economists assume that individuals
A)behave in unpredictable ways.
B)will never take actions to help others.
C)prefer to live in a society that values fairness above all else.
D)are rational and respond to incentives.

Question

Quizplus · Accepted Answer

Economists assume that individuals are rational and respond to incentives. This means that individuals make decisions that maximize their own self-interest, based on the information and resources available to them. They respond to incentives, such as rewards or punishments, in ways that are predictable and consistent with their own goals. This assumption is the foundation of much of economic theory and analysis.

Economists Assume That Individuals