The Assumption of Rational Self-Interest Means That Economic Decision Makers

question 17

Multiple Choice

The assumption of rational self-interest means that economic decision makers:

• A)have no concern for the welfare of others.
• B)make reasonable decisions based on their expectations of results.
• C)know with certainty which choice will have the best result.
• D)consider the welfare of others to be more important than their own happiness.
• E)do not make incorrect decisions or bad choices.

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Definitions:

Profit Margin

A financial performance ratio that calculates the percentage of revenue that exceeds the costs of goods sold, representing the portion of sales that turns into profit.

Investment Turnover

A ratio indicating how efficiently a company generates sales revenue from its investment in assets.

Return on Investment

A measurement of the gain or loss generated on an investment relative to the amount of money invested.

Residual Income

A measure of profit that exceeds the minimum required return on an investment or business venture.