Question

1. Economists may be able to predict how an individual will behave because:

a) Economists know more than most people.

b) Economists assume individual act rationally in their own best interests.

c) Economists predict the sales of goods and services.

d) Economists are people themselves, and understand their own behavior.

e) Individuals will usually behave as their economic advisors tell them to

2. Consumers are referred to as “suppliers” when:

a) They supply resources to firms and governments.

b) They supply the demand for final goods and services.

c) They supply equilibrium price to the firm.

d) They demand only what firms supply.

3. Which of the following is not an advantage of a corporation:

a) Many individuals can pool their money to fund the new firm.

b) Liability is limited.

c) The firm continues as a legal entity even if ownership changes hands.

d) Most shareholders are directly involved in daily management of the corporation.

e) It is the easiest way to amass a large amount of financing.

Answer 1

1. Answer is “Economists assume individual act rationally in their own best interests.”

When economists develop models or assumptions, their base is based on the rational way of thinking and interests

2. Answer is “They supply resources to firms and governments.”

The consumers or households supply human capital to firms and governments

3. Answer is “Most shareholders are directly involved in daily management of the corporation”

Shareholders are not directly involved in day to day work of management. For that they appoint CEO or MD for functioning of business