Question

Jamie must decide whether to buy a new truck. He concludes the costs of buying the truck are greater than the benefits. In Jamie’s case, buying the truck would be ____.
Question 2 options:


a productive choice


a rational economic decision


an opportunity cost


an irrational economic decision

Answer 1

Answer: An irrational economic decision.

In economics, we assume that individuals are rational i.e. they will always choose to maximize their satisfaction or utility by carefully choosing how to spend or invest their income (which is limited).

In the given question, Jamie has already concluded that the costs of buying a new truck are greater than the benefits.

If he buys the truck despite this conclusion, he will, most likely, blame himself for this decision. In other words, this decision would result in a decrease in Jamie’s satisfaction. Hence buying a truck would be an irrational economic decision.