According to the Rule of Rational Choice, Under What Circumstances

question 190

Multiple Choice

According to the rule of rational choice, under what circumstances will you engage in more of an activity?

• A) when the additional cost incurred as a result of the activity exceeds the additional benefit received
• B) when the opportunity cost of your time is very low
• C) when the total benefit from that activity exceeds the total cost of the activity
• D) when the additional benefit received as a result of the activity exceeds the additional cost incurred

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Definitions:

Short-term Capital Loss

A loss realized from the sale or exchange of a capital asset held for one year or less.

Long-term Capital Gain

Profit from the sale of an asset held for more than one year, typically taxed at a lower rate than regular income.

Section 1245

A section of the tax code that involves recapturing depreciation on certain types of property as ordinary income upon sale.

Section 1231 Gain

A gain from the sale or exchange of property used in a business, subject to favorable tax treatment under Section 1231 of the U.S. tax code.