What is one reason that consumers and businesses might not act rationally?
A)It is difficult to obtain enough information about the elasticities of demand and supply.
B)They may not realise their actions are inconsistent with their goals.
C)Consumer tastes change constantly.
D)They do not always value fairness when they make choices.

Question

Quizplus · Accepted Answer

Consumers and businesses might not act rationally if they are not aware that their actions are inconsistent with their goals. For example, a consumer may choose to buy luxury products that are beyond their budget, even though it may not be rational to do so. Similarly, a business may choose to invest in a project even though it may not be profitable in the long run. In both cases, the decision is not rational because the individuals involved are not aware of the inconsistency between their actions and their goals.

What Is One Reason That Consumers and Businesses Might Not