What Do Economists Mean By Rationality?


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The concept of rationality takes on varying perspectives in Economics. The basic meaning of Rationality is related to the idea of reason, thinking or explaining. In economics, it refers to a decision or a situation, if it is optimal. Thus individuals or organizations are often called rational, if they tend to act optimally in pursuit of their goals. There are a number of concepts base on this rationality in economics such as rational allocation of resources or rational corporate strategy or rational pricing or rational choice theory.

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