Why might the economy as a whole conform to the predictions of a model even if not all people are rational?
A. It won't; for the standard model to work, all people must be rational.
B. The standard model doesn't assume rationality.
C. People who are rational will profit from those who are not.
D. People who are irrational will profit from those who are not.
Answer: C
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If marginal utility is positive but diminishing, then total utility must be ________ as consumption of the good increases
A) decreasing B) positive and rising at an increasing rate C) positive and rising at a decreasing rate D) positive and rising at any rate
During periods of hyperinflation, which of the following is the most likely response of consumers?
a. Save as much as possible. b. Spend money as fast as possible. c. Invest as much as possible. d. Lend money.
An increase in the interest rate is associated with an increase in bond prices
a. True b. False Indicate whether the statement is true or false
Economists view positive statements as
a. affirmative, justifying existing economic policy. b. optimistic, putting the best possible interpretation on things. c. descriptive, making a claim about how the world is. d. prescriptive, making a claim about how the world ought to be.