Question

In: Economics

Which assumption below best reflects a basic understanding economists have about the world? 1- The world...

Which assumption below best reflects a basic understanding economists have about the world?

1- The world has limited productive resources.

2- There are limited wants.

3- More output creates more wants.

Solutions

Expert Solution

The assumptions mentioned in the question have played roles in various theories at some point in time. And while some theories emphasized the use of one assumption over the others, others did the opposite.

The question, however expects us to pick the best that reflects the understanding of the economists, thus, the third assumption, I believe would be an important pick.

If we look at the first two assumptions, although they have been widely used in economic theories to conclude various hypothesis, in the real world, they have been time and again challenged. Yes, the world seems to have limited resources, however, productive resources seem to improve over the period of time. Human Capital is one such resource.

There are limited wants, but in the modern era, the scope of wants seem to expanding, however they may be limited, but the limit seem to not have been defined just yet.

However, the third, still seems to be valid. Our market based economies seem to absorb whatever output is generated. More output leads to more wants. The chain goes like this- More Output, means more sales, more sales, means more revenue, more revenue means more profit and more profit means more demand.


Related Solutions

Which one of the following is best suited to examine the extent to which the assumption...
Which one of the following is best suited to examine the extent to which the assumption of homoscedasticity has been met when conducting linear regression analysis? a. Shapiro and Wilks test results for the unstandardized residuals b. Scatterplot of Mahalanobis distance against standardized residuals c.Scatterplot of studentized residuals against unstandardized predicted values d. Simple bivariate correlation between X and Y
6. Which is the best statement about the way economists study the aboriginal economy? a.They study...
6. Which is the best statement about the way economists study the aboriginal economy? a.They study the past, but do not try to predict the future. b.They use a probabilistic approach based on correlations between economic events. c.They devise theories, collect data, and then analyze the data to test the theories. d.They use controlled experiments much the same way a biologist or physicist does. 7. What is a common thread between aboriginal economics and other sciences such as physics? a.Experiments...
Economists assume that firms have a goal to maximize profits. This is a reasonable assumption also...
Economists assume that firms have a goal to maximize profits. This is a reasonable assumption also for not-for-profit organizations True or False?
5. Which of the following statements best reflects the nature of the relationship of fraud risk...
5. Which of the following statements best reflects the nature of the relationship of fraud risk factors to the existence of financial statement fraud perpetuated by a company’s management? (2 points) A. The existence of at least one fraud risk factor indicates that a financial statement fraud has definitely occurred. B. The lack of existence of at least one fraud risk factor indicates that a financial statement fraud has definitely not occurred. C. The existence of at least one fraud...
Which of the following statements would you say best reflects monetary policy? a. It is a...
Which of the following statements would you say best reflects monetary policy? a. It is a lot like gambling because the outcomes are most of the time uncertain. b. There is certainly some science involved, a lot of understanding that is needed, but a lot of uncertainty still remains. c.It is a hard and fast science. d. It is a hard and fast science.
1. Which of the statements below accurately reflects the assumptions of the competitive exclusion principle? A.The...
1. Which of the statements below accurately reflects the assumptions of the competitive exclusion principle? A.The competitive exclusion principle assumes that the competitors have the exact same resource requirements and that environmental conditions may be variable. B. The competitive exclusion principle assumes that competitors have different resource requirements and that environmental conditions remain constant. C. The competitive exclusion principle assumes that the competitors have the exact same resource requirements and that environmental conditions remain constant. D. The competitive exclusion principle...
1. Discuss GAAP versus non-GAAP numbers and their impact on financial statements. Which method best reflects...
1. Discuss GAAP versus non-GAAP numbers and their impact on financial statements. Which method best reflects the economic reality?
(1) Basic EOQ: You need to briefly describe the basic EOQ model with modeling assumption, the...
(1) Basic EOQ: You need to briefly describe the basic EOQ model with modeling assumption, the economic order quantity formula and the feature (insight). (2) EOQ extensions: Considering relaxing the assumptions in basic EOQ, you may get various EOQ model extensions. What’s the possible extension will be? For each extension, briefly describe the assumption, formula and feature as well. (3) Considering the following situations. Classify them as either A for appropriate or L for less appropriate for application of the...
Economists use economic models to study real world economic issues. The two basic economic models are...
Economists use economic models to study real world economic issues. The two basic economic models are Production Possibility Frontier (PPF) and the Circular Flow Diagram. How does the production possibility frontier model help us understand the feasible and efficient amounts that can be produced? What does the outward shift in production possibility curve indicate? What are the major markets and economic decision makers (economic agents) the circular flow diagram indicate? What is the importance of the diagram in various markets...
Which of the statements below are true about subatomic particles? 1. It is possible to have...
Which of the statements below are true about subatomic particles? 1. It is possible to have an atomic number greater than the mass number. 2. All atoms with the same number of protons have the same atomic symbol. 3. The number of neutrons is equal to the mass number minus the atomic number. 4. An isotope (of the same element) has the same number of neutrons. 5. The number of electrons is equal to the atomic number minus the charge....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT