Alex Sees That His Neighbors' Lawns All Need Mowing

question 173

Multiple Choice

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as

• A) rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants.
• B) greedy because he is asking for a high wage that some of his neighbors can't afford to pay.
• C) selfish because he is asking for a wage that is higher than others might charge.
• D) irrational because some neighbors refused his offer.

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Definitions:

Mark-Up

The amount added to the cost price of goods to cover overhead and profit, resulting in the selling price.

Effective Tax Rate

The true percentage of earnings that a person or business pays to the government, determined by dividing their total tax contribution by their taxable income.

Consolidated Statements

Consolidated Statements are financial reports that aggregate the financial position and operating results of a parent company and its subsidiaries, presenting them as a single entity.

Unamortized Acquisition Differential

The portion of the purchase price of a company that is not yet allocated to the acquired assets or liabilities over time through amortization.