Question

Institutions are particularly important for inducing people to engage in productive activities that add to total output rather than:

Select one:

a. productive activities that only add to their personal well-being.

b. transfer activities that merely take welfare-enhancing goods from one person or group and give them to another without increasing the total amount of goods produced in the economy.

c. non-productive government activity.

d. productive activities that produce only what consumers want.

Answer 1

Answer -

Option (a) - productive activities that only add to their person well being is correct.

Explanation -

Institutions are important for inducing people to engage the productive activities of the people that increases the total output and productivity of the firm ,which results in to minimising costs and maximize profit. Reduction in costs resulted in to increse in cost -profit ratio of the firm.

Institutions aren't involved in adding person well being it focus only on productive activities that increases the output of the firm.