What is the basic assumption of economics?

Economics Dec 17, 2020

Expert Solution

When we understand that businesses and consumers make everyday decisions about consumption, production, and money, we can understand the basic assumptions of economics. Most economists define 3 basic assumptions.

1. Consumers choose products that they prefer and how valuable they are to the consumer.

2. Consumers work to maximize the use of a product, but businesses work to maximize the amount of profit that they can make.

3. Consumers make independent choices based on the knowledge that they can gather about particular products.

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