If economists are making the assumption that business people try to maximize profits, the best way to determine whether this assumption is useful or not is to
A) see whether it generates accurate predictions about the choices of business people.
B) ask business people whether it is true or not.
C) find out whether U.S. businesses are more profitable than European businesses.
D) take a survey of people and see if they agree with this assumption.

Question

Quizplus · Accepted Answer

The best way to determine the usefulness of an assumption is to test whether it generates accurate predictions about the choices of the group in question. In this case, if assuming that business people try to maximize profits leads to accurate predictions about their behavior, then the assumption is useful.

If Economists Are Making the Assumption That Business People Try