Micro 13

Question 1

How do classical economists say u should make a decision (homo economicus)

Answer 1

All decisions an economic agent makes are considered and measured rather than rash and impulsive

Question 2

What does homo economicus need before making a decision. Why

Is the decisions utility maximising for them or others ?

Answer 2

All the relevant info so they can see the long and short run effects

It’s a selfish decision so utility maximising for them self

Question 3

What is meant by altruism?

Answer 3

when people make sacrifices to benefit others without expecting a personal reward,

Question 4

What is the invisible hand?

Answer 4

metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence

Question 5

What is imperfect information?

Answer 5

When economic agents do not have complete information about the costs and benefits of a decision or good or service.

Question 6

What is asymmetric information?

Answer 6

When one economic agent involved in a transaction possesses relevant information the other does not.