Which of the Following Best Describes an Assumption Economists Make

question 100

Multiple Choice

Which of the following best describes an assumption economists make about human behavior?

• A)They assume that individuals act rationally all the time in all circumstances.
• B)They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.
• C)They assume that people take into account the question of fairness in all decisions they make.
• D)They assume that individuals act randomly.

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Definitions:

Four-firm Concentration Ratio

A measure that expresses the total market share held by the four largest firms within an industry.

Herfindahl Index

A calculation of how concentrated a market is, achieved by adding together the market share squares of every firm within that industry.

Market Power

The ability of a company or group of companies to manipulate prices or market conditions in their favor, often due to a lack of significant competition.

Oligopoly

A market structure dominated by a small number of large firms, leading to limited competition and potentially higher prices.