According to Public Choice Theory, People Do Not Always Make

question 110

Multiple Choice

According to public choice theory, people do not always make informed choices because:

• A) the incentives to become informed are low as compared with the costs of being informed.
• B) they are ignorant by nature.
• C) they are irrational, so their decisions are not predictable.
• D) they believe making informed choices are the tasks only for the government.

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Definitions:

Noncash Assets

Assets owned by a business or individual that are not in the form of cash but can be converted into cash within a year, such as inventory, bonds, or property.

Capital Account

An account showing the net worth of a business, influenced by owner's contributions, withdrawals, and the business's earnings or losses.

Partners' Equity

The interest or claim that partners have in the assets of a business, equal to the total assets minus liabilities and other equities.

Equity

The amount of money that would be returned to shareholders if all of the assets were liquidated and all of the company's debt was paid off.