Which one is true? Explain why others are false.
1. Economics is the study of how people make choices under conditions of scarcity and of the results of those choices for society.
2. Microeconomics is the study of the performance of national economics and of the policies that governments use to try to improve economic performance.
3. Macroeconomics is the study of individual choices and of group behavior in individual markets.
4. The rational person pursues additional units as long as the marginal cost of the activity exceeds its marginal benefit.
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The true statement is:
1. Economics is the study of how people make choices under conditions of scarcity and of the results of those choices for society.
This statement accurately describes the fundamental concept of economics, which is the study of how individuals and societies allocate their limited resources to satisfy their unlimited wants and needs.
The other statements are false because:
2. Microeconomics is not the study of the performance of national economics and government policies. Microeconomics focuses on individual economic units such as households, firms, and markets, analyzing their behavior and decision-making processes.
3. Macroeconomics is not solely concerned with individual choices and group behavior in individual markets. It studies the overall behavior of the economy as a whole, including factors such as inflation, unemployment, economic growth, and fiscal and monetary policy.
4. The statement that a rational person pursues additional units as long as the marginal cost exceeds the marginal benefit is false. In economics, rational decision-making considers marginal cost and marginal benefit. A rational person will pursue additional units as long as the marginal benefit exceeds the marginal cost, as individuals generally aim to maximize their personal satisfaction or utility.
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