12 Questions
What is one of the main premises upon which modern economics is based?
The rationality of economic agents
How does a perfectly competitive market economy allocate resources according to the text?
In a Pareto-efficient way
Why could policy-makers still improve the workings of a market economy even if the two main premises of modern economics were correct?
Given that real-world economies are not perfectly competitive
What does it mean for economic agents to be considered 'rational' in economics?
They maximize expected utility by weighing costs and benefits
What recent developments in the neurosciences challenge the assumption of economic agents' rationality?
The violation of logic and probability rules in reasoning procedures
Why is the assumption of economic agents' rationality considered the backbone of economics?
It involves evaluating costs and benefits to maximize expected utility
What may explain addictive behavior like smoking and gambling according to the text?
Bounded willpower
What is rarely observed in the real world as per Weber's parlance?
Perfect-competition
What is the main source of macroeconomic volatility mentioned in the text?
Financial markets instability
In mainstream economics, what does the 'Rationality Principle' boil down to?
Utility-maximization
What would a descriptive or explanatory theory of rationality include according to the text?
'Willpower' strength
How does the text describe the 'Rationality Principle' in mainstream economics?
'Metaphysical proposition'
Explore the two main premises on which modern economics is based: the rationality of economic agents and the Pareto-efficiency of a perfectly-competitive market economy. Learn how policy-makers can still improve the workings of a market economy despite these premises.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
