Why are economic theories and principles imprecise? Shouldn’t they apply to everyone?
Please provide the best answer for the statement.
The main reason is that they are generalizations relating to economic behavior or the economy. The economic facts used to develop the theories and principles differ from person to person or economic institution to institution. They reflect tendencies or averages across large groups that may not apply to a particular individual. For example, if the price of a product drops significantly, the quantity demanded among consumers as a group is expected to increase, but some consumers may not increase their purchases.
You might also like to view...
Consider a game in which a player has a dominant strategy.
(i) If the game is played sequentially and the player moves first, will he necessarily choose his dominant strategy? Explain. (ii) If the game is played sequentially and the player moves second, will he necessarily choose his dominant strategy? Explain.
Managers can increase firm profits by:
A) increasing revenue only. B) decreasing costs only. C) increasing revenue and decreasing costs. D) none of the above.
A tycoon purchasing a loss making company will install new management teams only as long as the marginal value of the additional information these teams generate is worth the cost of installing them
Indicate whether the statement is true or false
The Ponderosa Bank receives a new deposit of $2,500. The reserves requirement is 20 percent. How much can this bank loan out as a result of this deposit?
A. $25,000 B. $12,500 C. $3,125 D. $2,000 E. $500