Question

Match the following terms with their definitions.

A. Rational choice
The amount of reluctance a person has to taking chances.
B. Utility
A decision-making tool that weighs additional costs and benefits of going for one more unit of something.
C. Marginal analysis
Measurement of personal satisfaction of wants and needs gained from the use or consumption of goods and services.
D. Risk aversion
Logical decision-making based on thoughtful analysis that compares the benefits and costs of an action.

Answer 1

Terms in economics matching their definitions:

A. Rational choice - Logical decision-making based on thoughtful analysis that compares the benefits and costs of an action.

B. Utility - Measurement of personal satisfaction of wants and needs gained from the use or consumption of goods and services.

C. Marginal analysis -  A decision-making tool that weighs additional costs and benefits of going for one more unit of something.

D. Risk aversion - The amount of reluctance a person has to taking chances.

Answer 2

Answer:

A. Rational choice  - Logical decision-making based on thoughtful analysis that compares the benefits and costs of an action.

B. Utility  - Measurement of personal satisfaction of wants and needs gained from the use or consumption of goods and services.

C. Marginal analysis  - A decision-making tool that weighs additional costs and benefits of going for one more unit of something.

D. Risk aversion  - The amount of reluctance a person has to taking chances.

Explanation:

• Rational choice is the decision made by an individual based on logical assumptions and calculations so that the final result would meet his/her interest and would help in reducing the costs of an action.

• Utility simply means value which can be derived from goods and services. It helps us in determining personal satisfaction of wants through the goods and services we purchase.

• Marginal analysis is a strategy of examining additional costs and benefits for procuring one more unit of a new good or service. It is decision-making tool used by both consumers and producers.

• Risk aversion is the process of reducing uncertainty or risk while buying or producing goods and services. It is the amount of reluctance a person exhibits while taking chances.