Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes"
Do you agree with her comment?
A) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits.
B) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations.
C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions.
D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions.
A
You might also like to view...
Import restrictions
A) can protect United States jobs in the protected industry, which increases economic welfare of the country as a whole. B) can protect United States jobs in the protected industry but will also lead to job reductions in other export industries. C) hurt people who work in importing companies, but makes consumers better off. D) cannot protect American jobs in any sector of the economy.
Which of the following will cause a change in the exchange rate?
A) changes in real interest rates B) changes in consumer preferences C) changes in the perception of economic stability D) all of the above
Which statement is the most accurate?
A. In the U.S., there is no such thing as non-competing groups. B. The jobs described in Beth Schulman's The Betrayal of Work are in the primary labor market. C. When you work for Wal-Mart as an associate, you are in the primary labor market. D. In Nickel and Dimed, Barbara Ehrenreich described her experiences in the secondary labor market.
In an open economy, an increase in savings because of concerns about the future should cause the domestic real interest rate to ________ and should cause net exports to ________.
A. fall; rise B. fall; fall C. rise; fall D. rise; rise