Your friends ask for your advice because you are studying economics. Which of the following best reflects an economist's approach to decision-making?

• A. Follow what most people do, since majority choices are always optimal.
• B. Make decisions based solely on personal preferences, ignoring any trade-offs.
• C. Always choose the option with the lowest monetary cost.
• D. Consider the opportunity costs and benefits of each choice before making a decision.

Answer: (D)

Verified step by step guidance

1. Understand that economists view decision-making as a process of weighing costs and benefits rather than following majority behavior or focusing only on monetary costs.
2. Recognize the concept of opportunity cost, which is the value of the next best alternative foregone when making a choice.
3. Analyze each option by comparing its benefits and opportunity costs to determine which choice maximizes overall satisfaction or utility.
4. Avoid making decisions based solely on personal preferences without considering trade-offs, as this ignores the economic reality of scarce resources.
5. Conclude that the best approach is to consider both the opportunity costs and benefits of each choice before deciding, reflecting the economist's rational decision-making framework.