Question

Consider the following statement: "The problem with economics is that it assumes that consumers and firms always make the correct decisions. But we know that everyone makes mistakes." What is the most correct response to this statement?a) Economics has a lot of problems such as those that caused the Great Recession.b) Economics assumes that consumers and firms are rational, not that they always make the right decisions.c) Economics is a proven field of study, and it has already solved this problem.d) Economics does assume that consumers and firms always make the correct decisions.

Answer 1

The correct answer is b) Economics assumes that consumers and firms are rational, not that they always make the right decisions

Step-by-step explanation:

The economy assumes that consumers and businesses operate in a unique and particular way, there are economic models that support circumstances under the term "perfect competition"; From a rational point of view, he believes that consumers act in a certain way, but some decisions are taken from an emotional perspective and leave rational analysis aside.

For example: For the economy, a vehicle has a limited period of use, when this period ends, the economy tells us that the consumer must purchase a new vehicle. But with an emotional perspective, there is a sentimental value on the part of the owner towards the vehicle, when the period of use has concluded, the owner prefers to repair the vehicle rather than buying a new one, no matters if it is more expensive and difficult than buying a new one.

So for the economy, the consumer of the last example, take the right decision?