Rational actors respond to incentives from "summary" of EBOOK: Macroeconomics by Rudiger Dornbusch,Stanley Fischer,Richard Startz
When individuals make decisions, they weigh the costs and benefits of different alternatives. Rational actors are those who make decisions by comparing the costs and benefits of different options. This means that individuals consider the incentives they face when making choices. Incentives can be financial or non-financial factors that motivate people to act in a certain way. Rational actors respond to these incentives by choosing the option that maximizes their utility or satisfaction.
For example, when the price of a good decreases, consumers are more likely to buy more of that good because the benefit of purchasing the good outweighs the cost. This is known as the law of demand in economics. Rational consumers respond to the lower price by increasing their co...
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