When Economists Assume That People Act Rationally, It Means They

question 2

Multiple Choice

When economists assume that people act rationally, it means they:

• A)make decisions based on complete and accurate information.
• B)make decisions that will not be regretted later on.
• C)make decisions based on what they believe is best for themselves using available information.
• D)make decisions based solely on what is best for society.
• E)commit no errors in judgment.

Distinguish between different types of cognitive abilities and their relevance to leadership.

Explain the concept of environmental influences on leadership.

Understand the basis and components of Katz's three-skill model.

Appreciate the importance of technical, human, and conceptual skills in leadership.

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Definitions:

Frank Knight

An economist known for differentiating between risk (measurable uncertainty) and uncertainty (unmeasurable risk), significantly contributing to the field of economics.

Joseph Schumpeter

An Austrian political economist known for his theories on business cycles, economic development, and the concept of creative destruction.

Profit

The difference between total revenue and total cost.

Rent

Payment made by a tenant to a landlord for the use of a property, room, or apartment for a specified period.