Economists Need to Develop Abstractions in Order To

question 96

Multiple Choice

Economists need to develop abstractions in order to:

• A)​avoid analyzing real-world economic interactions, which are too complicated to understand.
• B)​distinguish normative economic behavior from positive economic behavior.
• C)​avoid committing the fallacy of composition.
• D)​understand and explain economic behavior.

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Definitions:

Social Identity Theory

A theory that explains how individuals categorize themselves and others into various social groups, leading to a sense of identity based on group membership.

Realistic Conflict Theory

A social psychological model that explains intergroup conflicts, hostility, and aggression as a result of competition over resources or status.

Self-Serving Bias

A common cognitive bias that leads individuals to attribute their successes to internal factors while blaming external factors for their failures, thus preserving their self-esteem.

Overgeneralized Belief

A cognitive bias where an individual applies a general rule too broadly, assuming that it applies in far more situations than it actually does.