When Does a Rational Decision Maker Take an Action

question 2

Multiple Choice

When does a rational decision maker take an action?

• A) only if the marginal benefit is less than the marginal cost
• B) only if the marginal benefit is greater than the marginal cost
• C) only if the average benefit is greater than the average cost
• D) only if the marginal benefit is greater than both the average cost and the marginal cost

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Definitions:

Resource Market

A market where resources (such as labor, capital, and raw materials) required for the production of goods and services are bought and sold.

Bond Market

A financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market, including government bonds, corporate bonds, and other types of debt instruments.

Exchange Rate

The price at which one currency can be exchanged for another, influencing international trade and investment.

Dollar Price

The dollar price indicates the amount of U.S. currency required to purchase a good, service, or asset.