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The Role of Rational Self-Interest in Economic Analysis

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Engaging in voluntary exchanges that make both parties better off than they were before the exchange is called _____.

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1. What theory is the basis for when producers and consumers interact under the principle of voluntary exchange where not only is each individual better off, but so is society as a whole?

2. _____ helps decision-makers make predictions to find successful answers to production and consumption questions.

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About This Quiz & Worksheet

Making decisions based on one's self-interest serves as the logical foundation for market economics. To successfully pass this quiz, you will need to understand the psychology that drives supply and demand.

Quiz & Worksheet Goals

To demonstrate your comprehension of this topic, you will be quizzed on:

  • Voluntary exchanges
  • Philosophical aspects of a capitalism
  • Tools utilized to make economic decisions

Skills Practiced

  • Information recall - access the knowledge you've gained regarding the nature of decision making in a free market system
  • Making connections - use understanding of economic theories to answer questions
  • Reading comprehension - ensure that you draw the most important information regarding rational self-interest from the lesson

Additional Learning

To gain further insight into this subject, please read the accompanying lesson titled The Role of Rational Self-Interest in Economic Analysis. The lesson covers:

  • Adam Smith's 'Wealth of Nations'
  • Economic equilibrium
  • Analytical tools for economic decision making
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