Making rational decisions at the margin means that people:

• A. compare the additional benefits and additional costs of an action
• B. ignore opportunity costs when making choices
• C. make decisions based solely on past expenditures
• D. consider only the total costs and total benefits of all alternatives

Answer: (A)

Verified step by step guidance

1. Understand the concept of 'making decisions at the margin' in microeconomics, which involves evaluating the additional or incremental changes resulting from a decision.
2. Recognize that marginal analysis compares the additional benefits (marginal benefits) and additional costs (marginal costs) of a particular action or choice.
3. Recall that rational decision-making requires weighing these marginal benefits against marginal costs to determine if the action should be taken.
4. Note that ignoring opportunity costs or focusing solely on past expenditures (sunk costs) is not consistent with rational decision-making at the margin.
5. Conclude that the correct approach is to compare the additional benefits and additional costs of an action when making rational decisions at the margin.