Economics Does Not Study Correct or Incorrect Behaviors but Rather

question 198

Multiple Choice

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.

• A)equitably
• B)rationally
• C)emotionally
• D)selfishly

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Definitions:

Equilibrium Price

The market price at which the quantity of a good or service demanded equals the quantity supplied, balancing out buying and selling pressures.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting gains from trade.

Consumer Surplus

The gap between the aggregate sum consumers are ready and can afford to pay for a good or service and the aggregate sum they actually spend.

Uses of Markets

The functions markets serve in allowing buyers and sellers to exchange goods, services, and information, facilitating the allocation of resources.