Which of the Following Creates an Incentive to Increase the Amount

question 109

Multiple Choice

Which of the following creates an incentive to increase the amount of an activity?

• A)an increase in the marginal cost of the activity and a decrease in the marginal benefit from the activity
• B)a decrease in the marginal cost of the activity and an increase in the marginal benefit from the activity
• C)constant marginal cost and constant marginal benefit from the activity
• D)an increase in the marginal cost of the activity and an equal increase in the marginal benefit from the activity
• E)a decrease in the marginal cost of the activity and an equal decrease in the marginal benefit from the activity

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Definitions:

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but does not have full control over that company.

Fair Value

An estimate of the price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.