The rationality assumption says that
A) people do not intentionally make decisions that would leave them worse off.
B) people never make decisions that would leave them worse off.
C) people do not respond to incentives since incentives require scarce resources.
D) all economic analysis must be normative.

Question

Quizplus · Accepted Answer

The rationality assumption in economics assumes that people make decisions that are in their best interest, meaning they would not intentionally choose options that would leave them worse off. However, this does not mean that people always make the optimal decision, as they may not have complete information or may make mistakes. Therefore, choice A is the best option.

The Rationality Assumption Says That