Which of the following best describes a rational economic decision?

• A. A decision made solely based on tradition or habit, regardless of outcomes.
• B. A choice made randomly without considering any information.
• C. A decision that always results in the highest possible monetary gain.
• D. A choice made by weighing the expected benefits and costs to maximize personal satisfaction.

Answer: (D)

Verified step by step guidance

1. Understand the concept of rational economic decision-making, which involves making choices that maximize an individual's satisfaction or utility by comparing the expected benefits and costs.
2. Recognize that decisions based solely on tradition or habit do not consider the potential outcomes or trade-offs, so they are not rational in the economic sense.
3. Identify that random choices without information lack the deliberate evaluation of benefits and costs, and thus are not rational economic decisions.
4. Note that while maximizing monetary gain can be part of rational decisions, rationality in economics is broader and focuses on maximizing overall personal satisfaction, which may include non-monetary factors.
5. Conclude that the best description of a rational economic decision is one where the decision-maker weighs expected benefits against expected costs to maximize personal satisfaction.