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What is the “Fundamental Premise of Economics”?
- a)Natural resources will always be scare.
- b)Individuals are capable of establishing goals and acting in a manner consistent with achievement of those goals.
- c)Individuals choose the alternative for which they believe the net gains to be the greatest.
- d)No matter what the circumstances, individual choice always involves a trade-off.
Correct answer is 'C'. Can you explain this answer?
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What is the “Fundamental Premise of Economics”?a)Natural r...
The Fundamental Premise of Economics is that individuals choose the alternative for which they believe the net gains to be the greatest. This means that individuals are rational and make choices based on their own self-interest.
Explanation:
To elaborate further, let's break down the statement into smaller parts:
- Individuals: Economics is a social science that focuses on human behavior. It assumes that individuals are the basic unit of analysis and that they make choices based on their own preferences and objectives.
- Choose: Individuals have the ability to make decisions. They evaluate the available alternatives and select the one that best satisfies their needs and wants.
- Alternative: There are always trade-offs in any decision-making process. Individuals have to weigh the benefits and costs of each alternative and select the one that provides the highest net gain.
- Net gains: Net gains refer to the benefits minus the costs of a particular alternative. Individuals are assumed to be rational and will choose the alternative that maximizes their net gains.
In summary, the Fundamental Premise of Economics is that individuals are rational decision-makers who choose the alternative that provides them with the highest net gains. This premise is the foundation of economic analysis and is used to explain a wide range of economic phenomena, from consumer behavior to market outcomes.
Explanation:
To elaborate further, let's break down the statement into smaller parts:
- Individuals: Economics is a social science that focuses on human behavior. It assumes that individuals are the basic unit of analysis and that they make choices based on their own preferences and objectives.
- Choose: Individuals have the ability to make decisions. They evaluate the available alternatives and select the one that best satisfies their needs and wants.
- Alternative: There are always trade-offs in any decision-making process. Individuals have to weigh the benefits and costs of each alternative and select the one that provides the highest net gain.
- Net gains: Net gains refer to the benefits minus the costs of a particular alternative. Individuals are assumed to be rational and will choose the alternative that maximizes their net gains.
In summary, the Fundamental Premise of Economics is that individuals are rational decision-makers who choose the alternative that provides them with the highest net gains. This premise is the foundation of economic analysis and is used to explain a wide range of economic phenomena, from consumer behavior to market outcomes.
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What is the “Fundamental Premise of Economics”?a)Natural r...
It is because the consumer derives maximum satisfaction from the available scarce resources in order to reach equilibrium.
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What is the “Fundamental Premise of Economics”?a)Natural resources will always be scare.b)Individuals are capable of establishing goals and acting in a manner consistent with achievement of those goals.c)Individuals choose the alternative for which they believe the net gains to be the greatest.d)No matter what the circumstances, individual choice always involves a trade-off.Correct answer is 'C'. Can you explain this answer?
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