Rational Behavior

question 74

Multiple Choice

Rational behavior

• A) means incentives don't matter.
• B) requires people to consider the total costs and total benefits of their decisions.
• C) requires thinking at the margin.
• D) requires perfect information.

---

Definitions:

Cash Dividend

A payment made by a company to its shareholders, usually in cash, out of its profits or reserves.

Bond Payable

A long-term debt instrument issued by corporations and governments, promising to pay the bondholder a specified sum of money at future dates.

Indirect Method

A method often used in cash flow statements to convert net income into net cash flow from operating activities by adjusting for non-cash transactions and changes in working capital.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, also known as net earnings or net profit.