When economists assume that people act rationally, it means they:
A)make decisions based on complete and accurate information.
B)make decisions that will not be regretted later on.
C)make decisions based on what they believe is best for themselves using available information.
D)make decisions based solely on what is best for society.
E)commit no errors in judgment.

Question

Quizplus · Accepted Answer

When economists assume that people act rationally, it means that people make decisions based on what they believe is best for themselves using available information. This assumption is the basis for the classical economic theory that guides most economic analyses. It does not imply that people are free of errors in judgment or that their decisions will not be regretted later on, but rather that they act in their self-interest based on the information they have.

When Economists Assume That People Act Rationally, It Means They