Economists assume people behave rationally, which means that people
A) never make a mistake.
B) do not intentionally make decisions that make themselves worse off.
C) have the necessary information to always make correct decisions.
D) always understand the consequences of their decisions.
B
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The effective coordination of social behavior through voluntary exchange depends significantly upon
A) clearly defined property rights. B) such civic virtues as courtesy and tolerance. C) well-established and generally accepted rules regarding behavior. D) all of the above.
Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget. If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would
a. eat a fourth calzone because it has higher marginal utility b. drink a third glass of juice c. drink a third glass of juice if its price is lower than the price of calzones d. drink a third glass of juice if its price is less than half the price of the calzone e. drink a third glass of juice because it has lower marginal utility