Economists assume that the objective of households is to maximize ________,and that the objective of firms is to maximize ________.
A) leisure; profits
B) utility; profits
C) utility; utility
D) leisure; utility

Question

Quizplus · Accepted Answer

Economists assume that households aim to maximize their utility, which can be seen as a measure of satisfaction or well-being, while firms aim to maximize their profits, which are the difference between total revenues and total costs. Therefore, choice B, where households aim to maximize utility and firms aim to maximize profits, is the correct answer. The other choices, A, C, and D, do not accurately reflect the typical assumptions made by economists.

Economists Assume That the Objective of Households Is to Maximize