Question

If you wanted to make a statement about human behavior (ex. consumption, production, profit and costs) and you were asked to use the concepts of "economic choices" as the evidence for your opinion. What would your statement about human behavior be? AND what evidence would you use to back up your statement? minimum 250 words

Answer 1

In economics, when we study different economic activities like production, consumption etc. we always assume the rationality of the individuals but in reality human behavior may deviate from what we derive from the models. While consuming a particular commodity, in the ideal situation utility would be maximised keeping in mind the constraints attached with it. While in some situations, it may hold true, it may not hold true in certain other situations where the constraint on income is not properly defined or prices in the market are not clearly defined. Production of any commodity in the free market would be for the demand and as the classical economists believe that supply would create its own demand and hence human behavior would be reasonably motivated to produce the amount of goods that are needed in the economy