Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they are out of fashion. From the economist's perspective, was Sara behaving rationally when she bought those shoes?

Question

Quizplus · Accepted Answer

Rational behavior in economics assumes that individuals make decisions based on the best information available at the time and their preferences. Sara buying shoes that were in fashion at the time aligns with rational behavior, as her decision was based on her preferences and the information she had then. Rationality does not imply that decisions won't have outcomes that are later regretted or that circumstances won't change.

Sara Looks into Her Closet and Discovers a Pair of Like-New