Economists Find That Models Based on the Assumption of Rational

question 16

Multiple Choice

Economists find that models based on the assumption of rational behavior are robust,because a world in which everyone is rational would function quite similarly to a world in which there are no

• A) unexploited profit opportunities.
• B) constraints due to scarcity.
• C) inefficient markets.
• D) barriers to free trade.

---

Definitions:

Equity Method

A method of accounting for an investment, in which the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee.

Investment Revenue

Income generated from investments, such as interest, dividends, and capital gains.

Consolidated Balance Sheet

A financial statement that shows the combined financial position of a parent company and its subsidiaries, presenting the total assets, liabilities, and equity of the entire group.

Consolidated Income Statement

A financial report that combines the income, expenses, and net profit of a parent company and its subsidiaries, showing the total earnings of the entire corporation.