The Jones family has always been in the business of manufacturing and selling automobile tires. Usually the profit they earn is reinvested in the business. This year Seth, the youngest son, wants to invest the profit into starting a candy company. If Seth is a shrewd businessman, what does his suggestion indicate?
If we assume that Seth has no special passion for the candy business, then he must believe the money will get a higher rate of return by investing in the candy company than in the tire business. We do not know if this suggestion is based on immediate or potential rates of return.
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