In the Real World, Business Decisions Must Be Made Through

question 39

Multiple Choice

In the real world, business decisions must be made through insight, trial, and error, without perfect knowledge about demand and costs. Will the profit-maximizing prices and levels of output from the simple economic models still be good guides to real outcomes?

• A) No, because the simple economic models ignore the opportunity cost of resources.
• B) No, because even entrepreneurs who are able to find the profit-maximizing prices and level of output will be unable to compete with other entrepreneurs who charge higher prices.
• C) Yes, because they can hire economists who have sufficient knowledge of costs and demand conditions.
• D) Yes, because the entrepreneurs who are best able to find the profit-maximizing prices and output levels will survive and expand, driving others out of competitive markets.

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Definitions:

Rating Scale

A method to assign a value or score on a continuum for a specific trait or behavior.

Events

Occurrences or happenings, especially those significant to the psychological state or behavior of an individual.

Magnitudes

Quantitative measures that assign size, length, area, volume, or another metric quantity to objects or phenomena.

General Adaptation Syndrome

A three-stage response (alarm, resistance, exhaustion) that the body has to stress, proposed by Hans Selye.