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Chapter 1: Q 11. (page 25)

What are three reasons to study economics?

Short Answer

Expert verified

The three reasons to study economics are:

  1. Rational behavior of people
  2. Making better policy decisions
  3. Making an efficient thinker.

Step by step solution

01

Step 1. Meaning of Economics.

Economics is the study of how humans make decisions in the face of scarcity. It is about making choices and studying the impact of the choices on each other. It includes individual decisions, family decisions, business decisions, or societal decisions.

02

Step 2. The three reasons to study economics.

The three reasons to study economics are:

i. Rational behavior of people

Economics assumes that people are rational they perform activities that maximize their utility.

ii. Making better policy decisions.

Economics helps in choosing the best policy among the various alternatives and improves our decision-making skills.

iii. Making an efficient thinker

The knowledge of economics makes us knowledgeable thinkers. It helps us in making decisions like what to produce, how to produce, and for whom to produce.

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Most popular questions from this chapter

Governments may intervene in a market economy in order to

A. protect property rights.

B. correct a market failure due to externalities.

C. achieve a more equal distribution of income.

D. all of the above.

What would be another example of a "system" in the real world that would serve as a metaphor for micro and macroeconomics?

Macroeconomics is an aggregate of what happens

at the microeconomic level. Would it be possible for

what happens at the macro level to differ from how

economic agents would react to some stimulus at the

micro level? Hint: Think about the behavior of crowds.

You win \(100 in a basketball pool. You have a choice between spending the money now and putting it away for a year in a bank account that pays 5 percent interest. What is the opportunity cost of spending the \)100 now?

What are examples of individual economic agents?
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