The Decision Not to Acquire Information Because the Cost of Acquiring

question 139

Multiple Choice

The decision not to acquire information because the cost of acquiring the information exceeds the expected benefit from the information is known as

• A) rational ignorance.
• B) the principle of minimum differentiation.
• C) public choice theory.
• D) inefficient provision.

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Definitions:

Biased

Demonstrating or exhibiting unfair or prejudiced perspectives, often leading to partial judgments or decisions.

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments, representing the rate at which the net present value of costs equals the net present value of benefits.

Discount Rate

In the context of discounted cash flow analysis, this rate helps in assessing the present value of future cash flows.

Profitability Index

A calculation that determines the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.