Answer to Question #323660 in Microeconomics for Uplinkingkelvin

Question

Economists assume that a consumer is expected to make rational decisions but not functional. As a consumer of spaghetti ( GOOD A ) and Rice food ( GOOD B ), discuss how you might apply economic reasoning in making your decisions rationally. What problems can arise when you make functional decision(s)?

Answer 1

Economists establish a behavioral assumption about how people operate in different economic situations called rational self-interest. Acting in an economically reasonable manner requires taking steps that lower costs while increasing individual advantages. Acting, on the other hand, makes decisions economically illogical.