Which of the Following Costs Should Be Included When Analyzing

question 6

Multiple Choice

Which of the following costs should be included when analyzing choices within a cost-benefit framework?

• A) Average costs.
• B) Sunk costs.
• C) Marginal costs.
• D) Sunk costs and marginal costs.
• E) Average costs and opportunity costs.

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Definitions:

Discount Rate

The interest rate charged by central banks on loans they give to commercial banks and other financial institutions.

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy.

Loans

Money borrowed that is expected to be paid back with interest.

Open Market

An economic system with few barriers to free market activity where prices for goods and services are determined by supply and demand.