When people have too many choices, they tend to get confused while making a decision on what to choose and what to eliminate. This phenomenon in perspective of economics is called as "Cost Benefit Analysis".
The cost of something is what you give up to to get it. This may also be called as "Opportunity Cost". This means what an individual is willing to give to get something better or extra
Rational people always think of the margin. In simple words when people have to choose between two similar choices they always choose the one, which gives them something extra or provide some extra benefit
For Example: A person wants to buy a car, but is confused between 2 cars of similar price range, he would then, prefer the car which has some extra accessories or better amenities.
People like getting a better offer or better services.
"People Respond To Incentives".
No comments:
Post a Comment