The Central Assumptions of Economics That Form a Basis for Positive

question 60

Multiple Choice

The central assumptions of economics that form a basis for Positive Accounting Theory are that:

• A) all individual action is driven by self-interest and individuals will act in an opportunistic manner.
• B) all individuals are entrepreneurial and will act in an opportunistic manner.
• C) individuals cooperate in groups to form markets for the benefit of everyone.
• D) there is a moral code that guides the behaviour of individuals to operate efficient markets.

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Definitions:

Utility

A measure of satisfaction or happiness that a consumer receives from consuming goods and services.

Expected Utility Function

A concept in economics and decision theory that represents an individual's preference for a set of possible outcomes based on a probability distribution.

Sure Payment

A fixed amount of money that is guaranteed to be paid under specified conditions.

Lottery

A form of gambling involving the drawing of numbers at random for a prize, often regulated by governmental entities.