Explain the economic assumption that "people are rational."
What will be an ideal response?
"People are rational" means that economists assume consumers and firms will use all available information as they act to achieve their goals. Rational individuals weigh the benefits and costs of each action, and they choose an action only if the benefits exceed the costs.
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The binary dependent variable model is an example of a
A) regression model, which has as a regressor, among others, a binary variable. B) model that cannot be estimated by OLS. C) limited dependent variable model. D) model where the left-hand variable is measured in base 2.
Which group (or groups) would be the most upset by wide variation in the income distribution?
a. utilitarians b. utilitarians and liberals c. libertarians d. liberals and libertarians
Why is defining a market difficult?
a. Government regulations about the exchange of goods and services are complex. b. The conditions under which buyers and sellers exchange goods and services can vary. c. Scholars cannot agree on a standard definition. d. Urban and rural areas have different ways of exchanging goods.
Refer to the graph shown. The shift from SATC1 to SATC2 reflects:
A. diseconomies of scale. B. increasing marginal productivity. C. diminishing marginal productivity. D. economies of scale.