rationality

• What is the goal of a business acting rationally?

  To make decisions that maximize profits
• important to understand rational and irrational behavior in economics- very common exam q
• What are some reasons why people may behave irrationally?

  • Influence of other people
  • Importance of habits
  • Inability to effectively compute trade-offs and ignoring consequences
• How might the influence of other people lead to irrational behavior?

  It can pressure individuals to make choices that do not maximize their satisfaction
• What is an example of irrational behavior mentioned in the study material?

  Consumers switching from tobacco to e-cigarettes
• What is a common exam question related to rational and irrational behavior?

  Assessing the differences between rational and irrational behavior
• How can habits influence consumer behavior according to the study material?

  Habits can lead to automatic decisions that may not maximize satisfaction