If you were to behave according to the rational choice model when confronted with a loss of $25 on the same day in which you receive an unexpected gift of $25 you would
A. value the gift of $25 more than the loss of $25.
B. value the loss of $25 more heavily than the gift of $25.
C. see the two events as exactly offsetting and thereby of no consequence in your overall welfare.
D. discount the loss and value the gain so that you feel you have gained welfare.
Answer: C
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