Suppose that a person makes a choice that seems inconsistent with the cost-benefit principle.Which of the following statements represents the most reasonable conclusion to draw?
A) The person (explicitly or implicitly)over-estimated the benefits or under-estimated the costs or both.
B) The abstraction of the cost-benefit principle is so great as to be unable to explain behaviour.
C) The person does not grasp how decisions should be made.
D) The person is simply irrational.
E) Because people do not explicitly calculate benefits and costs,it is not surprising that choices are made which violate the cost-benefit principlE.

Question

Quizplus · Accepted Answer

The cost-benefit principle suggests that rational individuals will choose an option if its benefits outweigh its costs. Therefore, if someone makes a choice that appears to contradict this principle, it is more likely that they misjudged the costs and benefits of the options available to them. This does not necessarily mean that the person is irrational or does not understand how decisions should be made, but rather that they made an error in their judgment.

Suppose That a Person Makes a Choice That Seems Inconsistent