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Showing posts with the label Rational People Think at the Margin

Rational People Think at the Margin

Economics ts normally assume that people are rational. Rational people systematically and purposefully do the best they can to achieve their objectives, given the opprrtunities they have. As you study economics, you will encounter firms that decide how   many workers to hire and how much of their product to manufacture and sell to maximize profits. You will encounter consumers who buy a bundle of goods and services to achieve the highest   possible level of satisfaction subject to their incomes and the prices of those goods and services. Rational people know that decisions in life are rarely black and white but usually involve shades of gray. At dinnertime, the decision you face is not between fasting or eating like a pig but whether   to take that extra spoonful of mashed potatoes. When exams roll around, your   dicision is not between blowing them off or studying   24 hours a day but whether to spend an extra hour reviewing your notes instead of...