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

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VP
Joined: 23 Feb 2015
Posts: 1254
Which of the following best completes the passage below? According to  [#permalink]

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25 Mar 2017, 01:58
3
3
00:00

Difficulty:

65% (hard)

Question Stats:

56% (01:39) correct 44% (02:14) wrong based on 178 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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Re: Which of the following best completes the passage below? According to  [#permalink]

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01 Apr 2017, 05:56
iMyself wrote:
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

Can someone please explain this question? How can we say rational preference will give maximum profits?
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Re: Which of the following best completes the passage below? According to  [#permalink]

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01 Apr 2017, 11:27
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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Re: Which of the following best completes the passage below? According to  [#permalink]

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04 Apr 2017, 03:31
1
iMyself wrote:
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

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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Re: Which of the following best completes the passage below? According to  [#permalink]

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19 Dec 2018, 10:00
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Re: Which of the following best completes the passage below? According to   [#permalink] 19 Dec 2018, 10:00
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