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655-705 (Hard)|   Inference|      
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Which of the following best completes the passage below? According to 25 Mar 2017, 01:58
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C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

Difficulty:

65% (hard)

Question Stats:

54% (01:39) correct 46% (01:59) wrong based on 461 sessions

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Which of the following best completes the passage below?
According to neoclassical economics, people have rational preferences which can be ordered based on their value, or utility, to the individual. All people act to maximize utility and are assumed to make decisions based on full information. Businesses, on the other hand, seek to maximize profits. If these premises are true____________
A. People do not engage in irrational actions.
B. Businesses do not order their preferences based on value.
C. A business that seeks to maximize its profits should address the rational preferences of individuals.
D. The utility of a preference is based on the amount of profit it brings an individual or business.
E. The goals of businesses and individuals are incompatible.


Source: McGraw-Hill's GMAT
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C
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abhimahna
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Which of the following best completes the passage below? According to 01 Apr 2017, 05:56
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iMyself
Which of the following best completes the passage below?
According to neoclassical economics, people have rational preferences which can be ordered based on their value, or utility, to the individual. All people act to maximize utility and are assumed to make decisions based on full information. Businesses, on the other hand, seek to maximize profits. If these premises are true____________
A. People do not engage in irrational actions.
B. Businesses do not order their preferences based on value.
C. A business that seeks to maximize its profits should address the rational preferences of individuals.
D. The utility of a preference is based on the amount of profit it brings an individual or business.
E. The goals of businesses and individuals are incompatible.


Source: McGraw-Hill's GMAT
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Can someone please explain this question? How can we say rational preference will give maximum profits?
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godot53
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Which of the following best completes the passage below? According to 01 Apr 2017, 11:27
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I am not sure how C is the correct answer...
C. A business that seeks to maximize its profits should address the rational preferences of individuals.--->Where is the compulsion here that business should do something...

E seems to be the best one here...
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Which of the following best completes the passage below? According to 04 Apr 2017, 03:31
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iMyself
Which of the following best completes the passage below?
According to neoclassical economics, people have rational preferences which can be ordered based on their value, or utility, to the individual. All people act to maximize utility and are assumed to make decisions based on full information. Businesses, on the other hand, seek to maximize profits. If these premises are true____________
A. People do not engage in irrational actions.
B. Businesses do not order their preferences based on value.
C. A business that seeks to maximize its profits should address the rational preferences of individuals.
D. The utility of a preference is based on the amount of profit it brings an individual or business.
E. The goals of businesses and individuals are incompatible.


Source: McGraw-Hill's GMAT
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IMO

The goal of business is to maximize profits.Individuals tend to make rational preferences based on the factors mentioned above.
so if businesses need to make profit they need sell goods that address the customer preferences.
Since customers tend to buy things that are of value to them ,there is a high probability of making profits on such goods.

godot53, abhimahna
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Which of the following best completes the passage below? According to 18 Nov 2024, 07:20
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Passage Analysis:
Premises of neoclassical economics:

- People have rational preferences, ordered by their utility (value to them).
- People act to maximize their utility and make decisions based on full information.
- Businesses act to maximize profits.

What we are looking for:

A logical conclusion that aligns with the given premises.

Option Analysis:
A. People do not engage in irrational actions.

This is tempting but too extreme. The passage does not claim that people are incapable of irrational actions, only that neoclassical economics assumes rational preferences. It doesn’t rule out exceptions.
Eliminate.

B. Businesses do not order their preferences based on value.

This contradicts the passage. Businesses are said to seek profit maximization, which implies they act based on their own values (profits).
Eliminate.

C. A business that seeks to maximize its profits should address the rational preferences of individuals.

This aligns with the premises. Businesses aim to maximize profits, and people act based on rational preferences. To earn profits, businesses must cater to individuals’ rational preferences (e.g., through products or services).
Keep.

D. The utility of a preference is based on the amount of profit it brings an individual or business.

This misinterprets the concept of utility in the passage. Utility is subjective and specific to individuals; it is not inherently tied to profit.
Eliminate.

E. The goals of businesses and individuals are incompatible.

This contradicts the passage. There is no mention of incompatibility; in fact, the premises suggest that businesses and individuals interact in a way that could align their goals (individuals get utility, businesses get profits).
Eliminate.

Correct Answer: C
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