5. One key difference between traditional economics and behavioral economics is

Question

5. One key difference between traditional economics and behavioral economics is
a)
b)
c)
d)




A. Traditional economics does not argue that markets are efficient while behavioral economics does.

B. Traditional economics argues that individuals act rationally when making decisions; behavioral economics argues that they often act on a relative, versus rational, basis. irrationally.

C. Behavioral economics argues that individuals act rationally when making decisions; traditional economics argues that they often act on a relative, versus rational, basis.

D. Behavioral economics focuses on absolute decisions; traditional economics focuses on relative decisions.

Explanation / Answer

B. Traditional economics argues that individuals act rationally when making decisions; behavioral economics argues that they often act on a relative, versus rational, basis. irrationally.

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