Economists Assume That Rational Behaviour Is Useful in Explaining Choices

question 86

Multiple Choice

Economists assume that rational behaviour is useful in explaining choices people make:

• A)because irrational people do not make economic choices.
• B)even though people may not behave rationally all the time.
• C)because individuals act rationally all the time in all circumstances.
• D)even though people rarely, if ever, behave in a rational manner.

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Definitions:

Salaries

Regular payments made by an employer to an employee, typically paid monthly or biweekly for professional or office work.

Social Security Credit

Based on total wages and self-employment income during the year; the amount of earnings it takes to earn a credit changes each year; in 2009, a person had to earn $1,090 in covered earnings to get one credit; people born after 1929 need 40 credits in their lifetime to qualify for Social Security benefits.

Earnings

The amount of profit that a company produces during a specific period, indicating the financial performance.

401k Plan

A retirement savings plan offered by many American employers, allowing employees to save and invest a piece of their paycheck before taxes.