Assume That the Government Is Deciding Whether It Should Build

question 10

Multiple Choice

Assume that the government is deciding whether it should build a hospital in one of the main cities in the country.It will choose to build the hospital only if:

• A)the hospital generates positive revenues.
• B)the cost of building the hospital is low.
• C)the profits from the hospital are positive.
• D)the opportunity cost of building the hospital is zero.
• E)the total benefits from the hospital exceed total costs.

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Definitions:

Total Liabilities

The sum of all financial obligations or debts that a company owes to outside parties.

Acid-Test Ratio

A financial metric used to determine a company’s ability to pay off its short-term liabilities with its most liquid assets, excluding inventory.

Marketable Securities

Financial instruments that can be quickly converted into cash at a reasonable price.

Accounts Receivable

Money owed to a company by its customers for products or services delivered on credit.