The Assumption That Individuals Act Rationally Implies That People

question 71

Multiple Choice

The assumption that individuals act rationally implies that people:

• A) think only of themselves and disregard the well-being of others.
• B) undertake all those activities that do not have any marginal benefit.
• C) only consider the costs of an activity to decide whether it is worthwhile.
• D) perform charitable deeds only if the cost is high for the benefactor.
• E) people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile.

---

Definitions:

Apparent Authority

A principle that allows a third party to assume an agent has the authorization to act on behalf of a principal, even if such authority has not been granted.

Constructive Notice

A legal concept assuming that a person or entity is aware of facts by virtue of the information being publicly available, regardless of whether they have actually reviewed the information.

Contractual Liability

Liability that arises from entering into a contract, where one party may be obligated to compensate another party for the failure to perform as specified in the contract.

Unidentified Principal

A party in a transaction whose identity is not known to the other party, often in agent-principal relationships.