The Social Discount Rate Is an Important Component in Net

question 68

Multiple Choice

The social discount rate is an important component in net present value (NPV) calculations for public policies related to stock externalities,but economists do not agree on which value to use for this rate.Suppose a recent study reports that the NPV of a proposed carbon tax intended to reduce carbon dioxide emissions is positive,but the annual net benefits do not become positive until 2060.The authors of the study used a social discount rate of 2%.What can we say about the findings of the study if the research were repeated with a higher social discount rate?

• A)NPV would increase,and the annual net benefits would become positive after 2060.
• B)NPV would decline,and the annual net benefits would become positive before 2060.
• C)NPV would decline,and the annual net benefits would not change.
• D)The findings of the study would not change.

Interpret the significance of federal deposit insurance.

Realize the role of banks and other institutions in channeling funds from savers to borrowers.

Understand how to calculate and report gross profit at standard using variances.

Identify when a variance is considered material and the impact on cost control.

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Definitions:

Sole Proprietorship

A firm with a single owner who has the right to all profits but who also bears unlimited liability for the firm’s losses and debts.

Personal Liability

An individual's legal responsibility to settle a debt or fulfill an obligation from their own assets, as opposed to the liabilities being limited to business assets.

Business Organization

A legal entity formed to conduct business activities, ranging from sole proprietorships to corporations, structured according to law and operational needs.

Household Income

The combined gross income of all members of a household, encompassing wages, salaries, benefits, and other income sources before taxes.