Rationality Assumes

question 19

Multiple Choice

Rationality assumes:

• A)high intelligence.
• B)constant preferences.
• C)unlimited choices.
• D)maturity.

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost elements, making its total expense vary with changes in the level of output.

Fixed Cost

Expenses that do not fluctuate with changes in production volume, staying constant even as production levels vary.

Liability Insurance

A type of insurance that protects an individual or business from the risk of being sued and held legally liable for something such as malpractice, injury, or negligence.

Step-Variable Cost

A cost that remains fixed for a certain level of production or activity, but jumps to a higher amount once a certain threshold is exceeded.