Rational decision making
Definition. Rational decision making is the assumption that economic agents weigh the costs and benefits of their choices and select the option that maximises their net benefit or self interest. Consumers are assumed to maximise utility and firms to maximise profit, given the information available to them.
Rational agents make decisions at the margin, comparing the marginal benefit and marginal cost of an action and choosing it only when the marginal benefit is at least as great as the marginal cost.
This term belongs to Rational Decision Making in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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