When an Economist Assumes That the Owners of Firms Are

question 19

Multiple Choice

When an economist assumes that the owners of firms are motivated only by the desire to maximize profits,the economist most likely believes that

• A)it doesn't matter whether or not the assumption is descriptively accurate; what matters is whether a theory built on the assumption predicts well.
• B)the assumption is descriptively accurate,since surveys have been taken and the owners of firms have admitted that their only objective is to maximize profits.
• C)the assumption is inaccurate,since surveys have been taken and the owners of firms have admitted that they care about more than just profits.
• D)individuals entering business are quite narrow in their personal objectives.
• E)all people enter business for their own selfish gain.

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Definitions:

Dense Irregular Connective Tissue

A type of connective tissue that has fibers that are not arranged in parallel patterns, providing strength and support in multiple directions.

Adipose Tissue

A type of connective tissue known for storing fat cells, providing insulation, and serving as an energy reserve.

Safety Inventory

Extra inventory held to protect against unpredictability in demand or supply, ensuring product availability.

Supply Uncertainty

The unpredictability associated with the availability of products or materials necessary for production.