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Homework answers / question archive / Which of the following is a principle concerning how people interact? a) Markets are usually a good way to organize economic activity, b) Rational people think at the margin, c) People respond to incentives, d) All of the above are correct
Which of the following is a principle concerning how people interact?
a) Markets are usually a good way to organize economic activity,
b) Rational people think at the margin,
c) People respond to incentives,
d) All of the above are correct.
Option a) Markets are usually a good way to organize economic activity is correct.
Markets act as an interacting platform for the traders who are interested in offering products for value and consumers who are interested in buying them. It can be a physical market or a virtual one.
Option b) Rational people think at the margin is incorrect because it is concerned with the marginal analysis carried out by a rational person. It does not explain interaction among the entities in an economy.
Option c) People respond to incentives is incorrect because it is concerned with the preference theory associated with the consumers wherein they choose options providing more incentives. It does not explain market interaction.
