The Rational Choice Theory of Decision Making Predicts That Our

question 343

Multiple Choice

The rational choice theory of decision making predicts that our judgements will vary depending on:

• A)the value we assign to possible outcomes of our decisions.
• B)frequency but not probability.
• C)our history of successfully attaining other goals based on our decisions.
• D)the likelihood that someone else will pursue the same decision goals as us.

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Definitions:

Demand Price

The price of a given quantity at which consumers will demand that quantity.

Perfectly Inelastic

A market situation where the quantity demanded or supplied does not change in response to a change in price.

Deadweight Loss

The inefficiency caused in a market where all potential gains from trade are not realized due to factors like taxes or subsidies.

Per-Unit Tax

A tax imposed on a product on a per unit basis, raising the cost of production or sale for that product.