Which of the following best completes the passage below? According to

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

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