Which of the Following Is NOT an Assumption of the Classical

question 117

Multiple Choice

Which of the following is NOT an assumption of the classical model?

• A)Pure competition exists.
• B)Wages and prices are flexible.
• C)Government spending is necessary to achieve economic stability.
• D)People are motivated by self-interest.

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Definitions:

Consumer Incomes

The total earnings of consumers, including wages, salaries, and other earnings, which affect their purchasing power and demand for goods and services.

Teenage Population

Represents the segment of the population within the age range typically considered to be between 13 and 19 years old.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of demand to price changes.

Optimal Prices

The price point that maximizes a firm's profits or achieves the best balance between sales volume and profit margins.