Let’s consider the same with an example:
For an instance you love the flavor of chocolate in particular. So what does that lead to? Probably you will prefer chocolate ice-cream as the best flavor under your choice, right? Well that is known as rational choice.
Rational choice is dependent on the primary segment that is: what is your favorite flavor?
Therefore, we can say that rational choice is the one that compares the costs with the benefits and a decision is made where an individual (or government, in economic decision) enjoy better benefits. So therefore, the rationality is dependent on the choice that a persona makes for their benefits.
From this example, one can relate to the primary questions like: why people prefer iMac on top of dell? Why individuals prefer a certain goods and services for their benefits? Why is Indian government building a sewage project on the outskirts of Jaipur? And so on.
The answer lies of the intensity of the rational choice.
Link of Previous Main Topic:-
Links of Next Macroeconomics Topics:-
- The Economic Way of Thinking
- A Choice Is a Tradeoff
- Making a Rational Choice
- Benefit What You Gain
- Cost What You Must Give Up
- How Much Choosing At the Margin
- Choices Respond To Incentives
- Economics as Social Science And Policy Tool
- Graph Used In Economic Model
- Economic Problem
- Market Equilibrium
- Employment and Unemployment
- Measuring GDP and Economic Growth
- Economic Growth Macroeconomics
- Policies for Achieving Faster Growth
- The Exchange Rate and the Balance of Payments
- The Dollar and Carry Trade
- Expenditure Multiplier Know the Keynesian Model