Theme 1> Theme 1.1> Theme 1.1.2>Rational Decision-Making by Consumers
Rational Decision-Making : Consumers
IntroductionIn the previous section, we explored the overview of the process of rational decision-making through the Decision-Making Framework.
In this learning package, we will see how this framework can be applied to the decisions of one of the three economic agents- the Consumers. Activity : Video
Who do consumers refer to? How complicated can decisions of a consumer get? Why use the decision-making framework? This video illustrates how the rational decision-making framework can be applied to consumers-making decisions.
Think about it!
In Summary
CheckpointQuestion 1
In the decision of which car to purchase, a rational consumer would always choose the cheapest option.
Question 2
The valuation of costs and benefits differs from consumer to consumer. Even if consumers have the same set of wants, the same constraints and have the same information set, they are not likely to weigh costs and benefits in exactly the same way.
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