When studying individuals' economic behavior, economists assume that
A) individuals understand the rationale for all their actions.
B) individuals act as if they were rational.
C) only educated people act as if they were rational.
D) self-interest is of limited relevance in predicting an individual's actions.

Question

Quizplus · Accepted Answer

The assumption that individuals act as if they were rational is a cornerstone of economic theory. This means that individuals make decisions based on a careful weighing of costs and benefits, with the aim of maximizing their own self-interest. While this assumption may not always hold true in reality, it allows economists to develop predictive models of economic behavior that are widely applicable.

When Studying Individuals' Economic Behavior, Economists Assume That