Question

Question 7 (1 point)

Which of the following statements is true regarding common assumptions in economics?

a	Only some individuals are rational and make decisions based on self-interest.
b	Everybody makes decisions with a desired outcome in mind.
c	Self-interest does not mean “selfishness”. It means that it is one who decides what the “ultimate” goal is. Helping others can be part of the goal.
d	All of the above.
e	Only a) and b)

Question 8 (1 point)

Which of the following statements is true?

a	The production possibilities model is an economic model that shows different combinations of two goods that society can efficiently produce using all of its (currently) available resources and technology.
b	All along the production possibilities frontier (PPF) there is an efficient use of all (currently) available resources and technology in the economy.
c	At any point on the PPF the economy is productively inefficient.
d	All of the above.
e	Only a) and b)

Question 9 (1 point)

Which of the following statements is true?

a	A model should be as complex as possible to accomplish its purpose (to explain or predict an economic phenomenon, such as inflation or unemployment, for instance).
b	To create an economic model, we make two types of assumptions: simplifying assumptions, and critical assumptions.
c	A critical assumption is any assumption that makes a model simpler without affecting any of its important conclusions.
d	All of the above.
e	Only a) and b)

Answer 1

7.

Which of the following statements is true regarding common assumptions in economics?

b

Everybody makes decisions with a desired outcome in mind.

Reason: This makes individuals rational and utility maximizing. This is an important assumption in economics

Question 8 (1 point)

Which of the following statements is true?

e

Only a) and b)

Reason: A PPF shows various combinations of goods which can be produced using given resources. All points on PPF are efficient.

Question 9 (1 point)

Which of the following statements is true?

c

A critical assumption is any assumption that makes a model simpler without affecting any of its important conclusions.

Reason: Critical assumptions in model are those which make models simpler without affecting conclusions