4. Rational Decision Making

In the next few videos, you will deepen your understanding in the following

• Rational decision making process of economic agents is based on the use of the marginalist approach.

• Economic agents make the best decisions based on their objectives while taking into account various considerations (benefits, costs, constraints, information and perspectives).

The Marginalist Principle

Marginal Analysis for Different Economic Agents

Read Pages 24-26 of your lecture notes as you view the video.

Decision Making Framework

Read Pages 27-30 of your lecture notes as you view the video.

Answer the following questions to test your understanding.