Question

Economists considered __________ such as budgets and costs to be important factors in influencing human behaviour.

a) External factors
b) Internal motives
c) Economic constraints
d) Psychological variables

Answer 1

Economists view economic constraints like budgets and costs as significant influencers of human behavior, linking closely to the principles of behavioral economics that incorporate psychological insights into economic decision-making.

Step-by-step explanation:

Economists consider economic constraints such as budgets and costs to be important factors in influencing human behavior. This concept is closely related to behavioral economics which seeks to understand how psychological factors and state of mind can impact economic decisions.

Unlike traditional economics that primarily focuses on numerical models and rational decision-making behavioral economics integrates the insights of psychology to investigate how different situations can affect the perceived value of money and lead to decisions that might appear inconsistent or irrational to an observer.