The Marginal Decision Rule as Applied to Regulation States That

question 97

Multiple Choice

The marginal decision rule as applied to regulation states that regulations:

• A) should be undertaken when their marginal benefits exceed their marginal costs.
• B) should be undertaken when their marginal benefits are less than their marginal costs.
• C) that improve safety should be undertaken, whatever the costs.
• D) should be designed to minimize the net benefit.

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Definitions:

Net Present Value

A calculation used to estimate the value of an investment, adjusting for its cash inflows and outflows over time and discounting them to the present day.

Post Audit

A review conducted after the completion of a project or period to evaluate its compliance with projected outcomes and objectives.

Capital Budgeting

It is the process of evaluating and selecting long-term investments that are in line with the goal of shareholders' wealth maximization.

Simple Rate of Return

A financial metric calculating the increase in cash flow an investment generates, compared to its initial cost, not accounting for time value of money.