Choosing to Study for an Exam Until the Extra Benefit

question 83

Multiple Choice

Choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is

• A) not rational.
• B) an application of the cost-benefit principle.
• C) an application of the scarcity principle.
• D) the relevant opportunity cost.
• E) less desirable than studying for the entire evening.

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Definitions:

Incremental Cost

The additional cost that is incurred when the production volume is increased by one unit.

Relevant Cost

Costs that should be considered when making decisions because they will be affected by the decision.

Incremental Analysis

The process of evaluating the financial consequences of making changes in business activities, by focusing on the costs and benefits that will change as a result.

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use.