Economists generally assume that _____

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Economists generally assume that households act to maximize their utility, which is the satisfaction or pleasure derived from consuming goods and services. This assumption is based on the idea that individuals make rational choices and aim to maximize their well-being given the constraints they face, such as income, prices, and time. Firms, on the other hand, are assumed to act to maximize profits, which is the difference between total revenue and total cost. Profit maximization is based on the assumption that firms are rational and seek to use their resources efficiently to earn the highest possible returns for their shareholders.

Economists Generally Assume That _____