Which of the following best describes rational behavior?
A)analyzing the total expected costs of a decision
B)analyzing the total expected benefits of a decision
C)Continuing to undertake an activity until its total expected benefit no longer exceeds its total expected cost
D)undertaking activities as long as the marginal expected benefit exceeds the marginal expected cost

Question

Which of the following best describes rational behavior?
A)​analyzing the total expected costs of a decision
B)​analyzing the total expected benefits of a decision
C)​Continuing to undertake an activity until its total expected benefit no longer exceeds its total expected cost
D)​undertaking activities as long as the marginal expected benefit exceeds the marginal expected cost

Quizplus · Accepted Answer

Rational behavior involves making decisions based on the comparison of marginal expected benefits and marginal expected costs. This involves continuing an activity as long as the marginal expected benefit exceeds the marginal expected cost. Option A and B involve analyzing either total expected costs or benefits but do not consider the marginal analysis necessary to make rational decisions. Option C only considers total expected cost and benefit and may result in stopping activities even if they still provide a marginal benefit.

Which of the Following Best Describes Rational Behavior