Final answer:
Decision making by comparing marginal utility is a process of choosing between different options by assessing the additional satisfaction from consuming one more unit of a good. Individuals like José think in terms of utils to maximize their overall happiness, even though real-life decisions are often based on imperfect information.
Step-by-step explanation:
Understanding Decision Making and Marginal Utility
When we talk about decision making by comparing marginal utility, we are referring to the process that individuals like José might use to determine the optimal allocation of their resources. For instance, in deciding how many T-shirts and movies to purchase, José could think in terms of utils, which is an imaginary unit of satisfaction or utility that economists use to measure the happiness or satisfaction one gets from consuming goods and services. By comparing the marginal utility of an extra T-shirt to that of an extra movie, José can make a decision that maximizes his overall utility.
In real life, decision making can involve a range of choices from simple daily tasks to more complex life decisions, like pursuing further education or choosing a specific program. In practice, our decisions are often based on imperfect information, meaning that we do not have access to all possible data to make a perfect choice. However, even with this limitation, individuals still have to make numerous decisions on a daily basis.
In the social media age, decisions can be as straightforward as deciding whether to post something online or as complicated as determining whether to double major in college. Despite the challenges posed by imperfect information, individuals must assess the available information and consider the marginal utility of their options to make informed decisions.