Why Might the Economy as a Whole Conform to the Predictions

question 69

Multiple Choice

Why might the economy as a whole conform to the predictions of a model even if not all people are rational?

• A) The standard model doesn't assume rationality.
• B) People who are rational will profit from those who are not.
• C) People who are irrational will profit from those who are not.
• D) It won't; for the standard model to work, all people must be rational.

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Definitions:

Id

In psychoanalytic theory, the part of the mind in which innate instinctive impulses and primary processes are manifest.

Id

In psychoanalytic theory, the part of the personality that contains our primal, instinctual drives and operates on the pleasure principle.

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, superego, and reality.

Libido

A term used in psychoanalytic theory to denote the sexual drive or desire.