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Answer: ASet 2: Cross-Text Connections
Explanation
PASSAGE
Text 1 Economic rationalism assumes that humans are 'homo economicus'—rational agents who maximize utility. This model underpins much of classical economic theory. Text 2 Behavioral economics challenges this by incorporating psychology. It demonstrates that people often act irrationally due to cognitive biases, such as loss aversion, where the pain of losing is felt more intensely than the pleasure of gaining.
How does Text 2 critique the assumption in Text 1?
A. It introduces psychological evidence that contradicts the model of perfect rationality.✓ Correct
B. It agrees that people are rational.
C. It says money doesn't matter.
D. It proves economics is fake.
Detailed Explanation
Text 1: Rational agents. Text 2: Act irrationally/Biases. Critique: Contradicts rationality with psychology.
Key Evidence:
• "challenges this"
• "act irrationally"
• "cognitive biases"
Why others are wrong: B (Challenges it.), C (Utility maximization.), D (New field.).