What is the best definition of a rational self-interest choice quizlet?

Terms in this set (7)

Rational self-interest. each individual tries to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit. Economic Choice.

What is meant by rational self-interest?

Rational self-interest is when both parties are better off than they were before their exchange because each side is maximizing its own benefits to be better off, either financially or intrinsically.

What are self-interest choices?

Self-interest refers to actions that elicit personal benefit. … The Invisible Hand Theory suggests that when entities make economic decisions in a free market economy based on their own self-interest and rational self-interests it manifests unintended, positive benefits for the economy at large.

What is self-interest in economics quizlet?

Self-interest generally refers to a focus on the needs or desires (interests) of the self. A number of philosophical, psychological, and economic theories examine the role of self-interest in motivating human action.

Is rational self-interest the same thing as selfishness explain?

False: Rational self-interest does not mean that a person is not concerned about others as it is the case with selfishness.

What is considered rational?

Rational behavior refers to a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual. The assumption of rational behavior implies that people would rather take actions that benefit them versus actions that are neutral or harm them.

What is the role of self-interest in a market economy?

Self Interest is the motivator of economic activity.

To be self-interested simply means that you seek your own personal gain. You go to work because you want to get paid so you can buy the things you want. You go to school so you can get a better job someday and earn more money to buy the things you want.

What is the difference between self-interest and selfishness quizlet?

If you are acting in your own self-interest, you are compensated financially for providing a desirable service or product. Therefore you prosper as the result of helping other people. Selfish people don’t care what they have to do get money. They have no ethics, morals, or standards.

What is the definition of competition quizlet?

Competition is the activity of competing between the same or different species for the same resources.

Why is the self interest assumption useful to economists?

Economists assume that people will make choices in their own self-interest. They will choose those things that provide the greatest personal benefit, and they’ll avoid or forego those that aren’t as personally valuable and compelling. That’s what we mean by the assumption of rationality.

How do self-interest and competition affect the market?

How do self-interest and competition affect the free market? They affect the free market by having people ‘fight’ over resources, money of consumers and investments. Explain the invisible hand. The invisible hand is pushing firms to create the goods and sell them for as cheap as possible.

How do rational people make decisions at the margin?

Economists use the term marginal change to describe a small incremental adjustment to an existing plan of action. Keep in mind that margin means “edge,” so marginal changes are adjustments around the edges of what you are doing. Rational people often make decisions by comparing marginal benefits and marginal costs.

What is the difference between narrow self-interest and enlightened self-interest?

Enlightened self-interests includes narrow self–interest (which focuses on individual possessions) but it includes also interests that are shared, in which one has only partial ownership (which focuses on relationships, community, and social values) and interests that are purely altruistic (which focuses on interests …

What is the difference between greed and self-interest?

The fundamental point is that self-interest turns into greed when it is taken “too far” or “to excess.” Some students may say that someone’s self-interest becomes greed when it hurts others. Others may say that “when I want more, it is self- interest; and when you want more, it is greed.”

How does self-interest incentives and competition affect the free market?

a self-regulating mechanism of the market place by self-interest spurs consumers to purchase certain goods and services and firms to produce them. The competition causes firms to produce more and moderates their desire to raise prices. … the chief characteristic of a free market economy.

Which implies supremacy of self-interest over social interest?

Privatization implies supremacy of ‘self-interest’ over ‘social interest’. … Privatization promotes consumers’ sovereignty.

Is greedy and selfish the same?

As adjectives the difference between selfish and greedy

is that selfish is holding one’s self-interest as the standard for decision making while greedy is having greed; consumed by selfish desires.

What does Smith see as the role of government?

Smith saw the first duty of government was to protect the nation from invasion. He argued that a permanent military force, rather than citizen militias, was necessary to defend any advanced society. Next, he supported an independent court system and administration of justice to control crime and protect property.

What does greed do to a person?

Unrestrained greed in an individual can lead to callousness, arrogance, and even megalomania. A person dominated by greed will often ignore the harm their actions can cause others.

Is selfishness a sin?

When you hear the words “you’re so selfish,” they probably feel like an insult. To call someone “selfish” is to criticize their character, label them immoral, and suggest that they pay too much attention to themselves and not enough to others.

Are stingy and greedy the same?

As adjectives the difference between greedy and stingy

is that greedy is having greed; consumed by selfish desires while stingy is stinging; able to sting or stingy can be extremely close and covetous; meanly avaricious; niggardly; miserly; penurious; as, a stingy churl.