Which of the following best describes the type of human behavior that economists should observe when creating positive economic models?

• A. Actual choices and actions made by individuals and firms in real-world situations
• B. The personal opinions of economists about what is fair or just
• C. The political preferences of policymakers
• D. How individuals and firms ought to behave according to ethical standards

Answer: (A)

Verified step by step guidance

1. Understand that positive economic models aim to describe and predict actual behavior without making judgments about what should be done.
2. Recognize that positive economics focuses on objective analysis based on observable data, such as the real choices and actions of individuals and firms.
3. Distinguish positive economics from normative economics, which involves personal opinions, ethical considerations, or political preferences.
4. Identify that the correct behavior to observe for positive models is the actual behavior exhibited in real-world situations, not what people think should happen.
5. Conclude that economists should base positive economic models on empirical evidence of actual decisions and actions taken by economic agents.