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One of your classmates, Sally, is a hardworking student, serious about her classes, and conscientious about her grades. Sally is also involved, however, in volunteer activities and an extracurricular sport. Is Sally displaying rational behavior? Based on what you read in this chapter, construct an argument supporting the conclusion that she is.

Short Answer

Expert verified

Sally is displaying rational behavior. It is because she is choosing the alternatives based on her self-interest instead of using the simple rule of thumb.

Step by step solution

01

Step 1. Rationality Assumption.

Rationality assumption states that a person should consider every possible choice for decision-making and then choose the best alternative.

02

Step 2. Reason.

Sally is displaying rational behavior. It is because she is choosing the alternatives based on her self-interest instead of using the simple rule of thumb. She would choose studies, volunteering, and sports on the basis of what she likes.

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Most popular questions from this chapter

For each of the following approaches that an economist might follow in examining a decision-making process, identify whether the approach relies on the rationality assumption or on the assumption of bounded rationality:

(a) To make predictions about how many apps a person will download onto her tablet device, an economist presumes that the individual faces limitations that make it impossible for her to examine every possible choice among relevant apps.

(b) In evaluating the price that an individual will be willing to pay for a given quantity of a particular type of healthcare service, a researcher assumes that the person considers all relevant health care options in pursuit of his own long-term satisfaction with resulting health outcomes.

(c) To determine the amount of time that a person will decide to devote to watching online videos each week, an economist makes the assumption that the individual will feel overwhelmed by the sheer volume of videos available online and will respond by using a rule of thumb.

Distinguish between Normative and Positive Economics.

Why do you suppose that economists sometimes disagree about whether to classify freelancers who provide paid consulting services to businesses as "workers" or "firms"?

What would be the appropriate change in the U.S. degree of plastic-waste cleanliness if the marginal cost of pollution abatement is higher than the associated marginal benefit?

Under the rationality assumption, could a woman potentially take into account her family's welfare as well as her own when considering having another child? Explain your reasoning.

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