MICROECONMICS : CHAPTER 1

1. Rational people: Rational behavior refers to a decision-making process that

is based on making choices that result in the optimal level of benefit
or utility for an individual. The assumption of rational behavior implies that
people would rather take actions that benefit them versus actions that are
neutral or harm them. Rational people systematically and purposefully do the best they can to
achieve their objectives, given the available opportunities.
2. Equality : Equality means that those benefits are distributed uniformly among society’s
members. In other words, efficiency refers to the size of the economic pie, and equality refers to
how the pie is divided into individual slices. Economic equality is the belief that people should
receive the same rate of pay for a job, regardless of race, gender, or other characteristics
that are not related to their ability to perform the task. Economic equality is the concept or
idea of fairness in economics, particularly in regard to taxation or welfare economics. More
specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a
basic and equal minimum of income, goods, and services or to increase funds and commitment
for redistribution.