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Jason is faced with two options: A BMW costing $40,000 gives him an additional 800 units of utility, and a laser printer costing $1,000 gives him an additional 25 units of utility. Rational choice theory would predict that he would choose _________.

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Answer:

B. To Purchase the laser printer

Explanation:

Rational Choice theory states that individuals should use rational calculations to make rational choices and achieved outcomes in line with their own personal objectives.

Therefore, having understood that,

Rational calculations to be used here give the data would be calculating Marginal Utility per dollar spent on each commodity.

For the the BMW, marginal utility per dollar = MU/Cost of BMW = 800/40000

= 0.02

For the laser printer, MU per dollar = MU/Cost of printer = 25/1000

= 0.025

Since MU per dollar of the laser printer (0.025) is greater than the MU per dollar of BMW ( 0.02), Jason should choose the Laser printer following rational choice theory.

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