Question

The benchmark models in microeconomic theory assume consumers and firms that act to maximize utility from consumption expenditures and profits, respectively. Discuss whether you think that these assumptions are reasonable and evaluate some potential alternatives.

Answer 1

According to me, I think it's true that benchmark models in microeconomy theory asuumes consumers and firms that act to maximize the utility from the consumption expenditures and profits, which are reasonable because in terms of the economics the utility is the factor which drives the exogenous and indegenous variable of the industry it's output and also the customer who utilizes that particular commodity. This assumption describes that As a customer they maximize the utility and as a producer they maximizes the profit. And also the more the customer wishes to maximize the utility of consumption through expenditure the more will be the maximization of utility of the profit of the industry will present. Hence i agree with this assumption and alos i feel it as a reasonable from the economic point of view.

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