Which of the Following Best Defines Personal Finance

question 28

Multiple Choice

Which of the following best defines personal finance?

• A)The study of how people minimize risk for a given level of return
• B)The study of how people maximize return for a given level of risk
• C)The study of how people develop the cash flows necessary to support their operations and provide for their well-being
• D)The study of how ethics should influence financial management decisions
• E)The study of how people maximize risk for a given level of return

---

Definitions:

Average Fixed Cost

Calculated by dividing total fixed costs by the quantity of output produced, showing the fixed cost per unit.

Sunk Cost Fallacy

The misconception that future decisions should be influenced by previously incurred costs that cannot be recovered.

Marginal Cost-Benefit Calculations

The process of evaluating whether the additional benefits of an action or investment outweigh its additional costs.

Average Fixed Costs

The total fixed costs of production divided by the quantity of output produced, representing how fixed costs spread out over units of output as production increases.