Economists Make Predictions About Individual Behaviour Based on the Assumption

question 195

True/False

Economists make predictions about individual behaviour based on the assumption that people exploit opportunities to make themselves better off.The fact that different individuals make different choices when confronted with the same situation implies that this assumption is often violated.

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Definitions:

Perfectly Competitive

Refers to a market structure where there are many buyers and sellers, all producing homogenous products, with no single participant having the power to influence the market price.

Industry Supply Curve

A graphical representation showing the relationship between the price of a good and the total output of the industry for that good.

Elastic

Describes a situation where the quantity demanded or supplied changes significantly in response to a change in price.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the variable cost of producing one unit of a good or service.