If individuals behave irrationally in some circumstances, why do economists typically assume that they behave rationally?
a. The assumption of rationality allows economists to make powerful statements that apply the majority of the time.
b. The assumption of rationality was used before psychologists discovered ways in which individuals behave irrationally.
c. The assumption of rationality is
used because economists do not understand principles of psychology.
d. The assumption of rationality has yet to be refuted with scientific evidence.
a
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In the case of pure monopoly:
a. one firm is the sole producer of a good or service which has no close substitutes b. the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue c. the demand curve is always elastic d. a and b only e. a, b, and c
In less developed economies, the distribution of income is
a. more concentrated (i.e., distributed less evenly) than in developed economies b. less concentrated than in developed economies c. such that the bottom 20 percent of households define the poverty threshold d. such that the top 20 percent of households define the poverty threshold e. completely even