The Hypothesis That People Are Nearly, but Not Fully Rational

question 33

Multiple Choice

The hypothesis that people are nearly, but not fully rational, cannot possibly fully examine every available choice, and utilize simple rules of thumb in making decisions is known as the

• A) irrationality hypothesis.
• B) ceteris paribus hypothesis.
• C) individual aggregation hypothesis.
• D) bounded rationality hypothesis.

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Definitions:

Average Total Cost

The total cost of production divided by the number of goods produced, accounting for both fixed and variable costs.

Output

The total amount of goods or services produced by a firm, industry, or economy within a specific period.

Fixed Cost

A cost that does not change with the level of output or production, such as rent or salaries.

Short Run

A period in economics during which at least one input, such as plant size, is fixed and cannot be changed.