main stream Econ

Question 1

what are the basic assumptions of mainstream economics

Answer 1

human behavior tends to be instrumentally rational

Question 2

what does mainstream economics study

Answer 2

studies the nature and consequences of instrumental rationality

Question 3

utility

Answer 3

a persons amount of desire-satisfaction can be understood as a quantity determined by strength of desires and how well they are satisfied

Question 4

demand curve

Answer 4

represents how much of a good consumers will buy, as a function of price- slopes downward- the lower the price the more will be bought

Question 5

price

Answer 5

marginal utility of consumption

Question 6

supply curve

Answer 6

represents how much of a good producers will produce, as a function of price- slopes upward, the higher the price the more you produce and sell

Question 7

what does modern price theory say about how prices are determined

Answer 7

prices are determined by supply and demand curve, which are both determined by human desires

Question 8

diminishing marginal utility

Answer 8

as the quantity of x increases, marginal utility decreases

Question 9

effects of mechanization and specialization

Answer 9

marginal value of labor increases so wages and employment increase. more productivity leads to larger aggregate demand