In Economics, the Function of Theories, Laws, and Hypotheses Is

question 137

Multiple Choice

In economics, the function of theories, laws, and hypotheses is to:

• A) prevent any misunderstanding of economic behavior.
• B) divide s between microeconomics and macroeconomics.
• C) generate a complete and unchanging description of economic behavior.
• D) discover relationships between events that are important to economic behavior.

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Definitions:

Pure Exchange Economy

An economic model where agents trade existing goods without the production of new goods, focusing on the allocation and distribution of resources.

Utility Function

A mathematical representation that ranks the preference level of different bundles of goods, showing satisfaction or happiness derived from consumption.

Numeraire

A standard unit of account or measuring stick in economics used to compare the value of various goods or services.

Utility Function

A mathematical tool used in economics to represent a consumer's preference ranking of different bundles of goods.