If you were to behave according to the rational choice model when confronted with a loss of $25 on the same day in which you receive an unexpected gift of $25 you would
A)value the loss of $25 more heavily than the gift of $25.
B)discount the loss and value the gain so that you feel you have gained welfare.
C)see the two events as exactly offsetting and thereby of no consequence in your overall welfare.
D)value the gift of $25 more than the loss of $25.

Question

Quizplus · Accepted Answer

The rational choice model assumes that individuals make decisions based on a logical evaluation of the available choices and their outcomes. In this scenario, a rational individual would see the loss of $25 and the gain of $25 as offsetting each other, resulting in no net change in welfare.

If You Were to Behave According to the Rational Choice