When does a rational decision maker take an action?
A) only if the marginal benefit is less than the marginal cost
B) only if the marginal benefit is greater than the marginal cost
C) only if the average benefit is greater than the average cost
D) only if the marginal benefit is greater than both the average cost and the marginal cost

Question

Quizplus · Accepted Answer

A rational decision maker takes an action only if the marginal benefit of that action is greater than the marginal cost. This is because rational decision makers strive to maximize their overall utility or satisfaction, and taking an action with a higher marginal cost than benefit would decrease their overall utility. Therefore, option B, only if the marginal benefit is greater than the marginal cost, is the best choice.

When Does a Rational Decision Maker Take an Action