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Roughly speaking, when you are dealing with business firms operating in a competitive system, you can assume that they're going to act rationally. Why? Because someone in a firm who buys things at $10 and sells them for $8.00 isn't going to last very long in that firm.
Ronald Coase
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Interpretation

What this quote means

Firms in a competitive market act rationally to survive.

The quote by Ronald Coase emphasizes that in a competitive business environment, firms are incentivized to make rational decisions in order to remain viable. If a firm consistently operates at a loss, such as buying products for $10 and selling them for $8, it will struggle to survive because rational economic behavior dictates that firms must seek profit to continue their operations effectively.

Themes

BusinessRationalityCompetitionProfitEconomics

In practice

Example use cases

During a business seminar to illustrate the importance of making wise financial decisions.

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We must first note that economic factors are taken into account in a world in which ignorance, prejudice, and mental confusion, encouraged rather than dispelled by the political organization, exert a strong influence on policy making.
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