The Purely Rational Model of Decision Making Is Rarely Practiced

question 94

Multiple Choice

The purely rational model of decision making is rarely practiced in reality because it:

• A)ignores the fact that problems must be defined before alternatives are chosen.
• B)assumes that human beings make decisions based on their emotions and abilities.
• C)assumes that people are perfectly rational in their decision making.
• D)ignores the fact that people evaluate their decision after an alternative has been chosen and implemented.
• E)does not consider the problems associated with implementing each of the alternatives.

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Definitions:

Position

An investment holding or the amount of a particular security, commodity, or currency that an investor owns or has contracted to buy or sell.

Stock Index Futures

Are futures contracts where the underlying is a stock index, and they are used by investors to speculate on the future direction of the index's price or to hedge against potential index movements.

Multiplier

An economic factor that quantifies the effect of a change in one economic variable on another, for instance, how government spending affects national income.

Dollars

The official currency of the United States, also widely used as a benchmark and reserve currency globally.