Which of the Following Is a TRUE Statement About the Economic

question 97

Multiple Choice

Which of the following is a TRUE statement about the economic assumption of rationality?

• A)Individuals who are rational necessarily ignore the interests of others.
• B)Individuals generally act as though they are rational.
• C)Individual behavior may be irrational but group behavior is always rational.
• D)People make decisions as if they are omniscient.

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Definitions:

Ending Capital Balance

The amount of capital a company or individual has at the end of a financial period.

Withdrawals

Amounts taken out from a business by its owner(s) for personal use, reducing the owner's capital account.

Net Income

The company's overall earnings following the deduction of all expenses and taxes from its total revenue.

Statement Of Owner's Equity

A report that summarizes the fluctuation in the equity of a business due to profits earned, dividends paid, and capital invested during a specific period.