A rational person does not act unless ?
Correct answer: C. The action produces marginal benefits that exceed marginal costs.
- A. the action is ethical
- B. The action produces marginal costs that exceed marginal benefits.
- C. The action produces marginal benefits that exceed marginal costs.
- D. The action makes money for the person.
Explanation
A rational person undertakes an action when its marginal benefit is greater than its marginal cost, because the additional gain then exceeds the additional sacrifice. Ethical or monetary considerations are not the defining condition in this economic rule.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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