Rational people make decisions at the margin by: a) Following marginal traditions, b) Behaving in a random fashion, c) Thinking in black-and-white terms, d) Comparing marginal costs and marginal benefits

The correct answer is (d).

1. Rational people make decisions at the margin by comparing the marginal costs and marginal benefits.

Marginal costs are the extra costs incurred to acquire an additional unit of a resource or product. The prices for products in most markets, such as perfect competition, are where marginal cost and price level correspond. Any profit-maximizing firm will set their prices at this level. Marginal benefit, on the other hand, shows the additional gain or satisfaction that a consumer gets from an additional unit of a commodity. Rational consumers seeking to maximize satisfaction will base their economic decisions at the level where marginal benefit surpasses the marginal cost. For example, if a consumer wants to buy a new phone, the purchase decision is determined by comparing the marginal costs and the marginal benefit. Rationality is one of the ten principles of economics.