Question

Match the following terms with their definitions.

Answer 1

Answer:

A. Rational choice  - Logical decision-making based on thoughtful analysis that compares the benefits and costs of an action.

B. Utility  - Measurement of personal satisfaction of wants and needs gained from the use or consumption of goods and services.

C. Marginal analysis  - A decision-making tool that weighs additional costs and benefits of going for one more unit of something.

D. Risk aversion  - The amount of reluctance a person has to taking chances.

Explanation:

• Rational choice is the decision made by an individual based on logical assumptions and calculations so that the final result would meet his/her interest and would help in reducing the costs of an action.

• Utility simply means value which can be derived from goods and services. It helps us in determining personal satisfaction of wants through the goods and services we purchase.

• Marginal analysis is a strategy of examining additional costs and benefits for procuring one more unit of a new good or service. It is decision-making tool used by both consumers and producers.

• Risk aversion is the process of reducing uncertainty or risk while buying or producing goods and services. It is the amount of reluctance a person exhibits while taking chances.

Answer 2

Terms in economics matching their definitions:

A. Rational choice - Logical decision-making based on thoughtful analysis that compares the benefits and costs of an action.

B. Utility - Measurement of personal satisfaction of wants and needs gained from the use or consumption of goods and services.

C. Marginal analysis -  A decision-making tool that weighs additional costs and benefits of going for one more unit of something.

D. Risk aversion - The amount of reluctance a person has to taking chances.