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Choice Theory and Rational Choice Theory Quiz

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Choice Theory and Rational Choice Theory Quiz

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Questions and Answers

According to choice theory, what are the assumptions about individual action?

Individuals have preferences and make self-interested choices (correct)

Individuals make choices based on rationality

Individuals have preferences and face constraints

Individuals make choices based on collective outcomes

What is the main focus of consumer theory?

Defining the principles that guide individual action

Exploring the consequences of individual action on collective outcomes

Allocating a given total between different options (correct)

Analyzing the theorems of welfare economics

Who introduced choice theory?

John Keynes

Adam Smith (correct)

Friedrich Hayek

Karl Marx

What does choice theory say about aggregate social behavior?

<p>It results from self-interested choices and constraints individuals face</p> Signup and view all the answers

What are the theorems of welfare economics according to choice theory?

<p>Any Pareto efficient outcome can be reached as a decentralised set of optimization problems</p> Signup and view all the answers

Study Notes

Choice Theory

Assumptions about individual action:
Individuals act rationally to maximize their satisfaction or happiness
Choices are made based on preferences and resources
Individuals are responsible for their own choices and actions

Consumer Theory

Main focus:
Understanding how consumers make decisions about what goods and services to buy
Analyzing the factors that influence consumer behavior

Origin of Choice Theory

Introduced by:
Dr. William Glasser, an American psychiatrist

According to choice theory:
Aggregate social behavior is the result of individual choices and actions
There is no collective or group behavior, only individual behaviors

Theorems of Welfare Economics

According to choice theory:
The first theorem states that a competitive equilibrium is Pareto optimal
The second theorem states that any Pareto optimal allocation can be achieved through a competitive equilibrium

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Description

Test your knowledge on choice theory and rational choice theory with this quiz! Learn about the principles that guide individual actions and the impact they have on collective outcomes. Explore concepts such as rationality, self-interest, and aggregate social behavior in this insightful quiz.