Most People Make Some Decisions Based on Intuition Rather Than

question 74

Multiple Choice

Most people make some decisions based on intuition rather than calculation. This is:

• A) irrational, because intuition is often wrong.
• B) consistent with the economic model of decision-making, because calculating costs and benefits leads to decision-making pitfalls.
• C) consistent with the economic model because people intuitively compare the relative costs and benefits of the choices they face.
• D) inconsistent with the economic model, but rational because intuition takes into account non-financial considerations.

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Definitions:

Rental Income

Income received from renting out a property or another asset.

Property Taxes

Levies imposed by a government on a property owner, typically based on the value of the property.

Effective Rate

The actual interest rate an individual pays on a loan or earns on an investment, taking into account the effect of compounding.

Quarterly Compounding

A technique in which interest is computed and then compounded to the main amount quarterly.