Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 26

Each statement below is part of an economic model. Indicate whether the statement is a prediction of cause and effect or an assumption.
a. People behave rationally.
b. If the price of a good falls, people will consume more of that good.
c. Mass starvation will occur as population outgrows the food supply.
d. Firms want to maximize profits.