Because It Is the Common Denominator That We Use to Compare

question 14

Multiple Choice

Because it is the common denominator that we use to compare products and decide which ones we will buy, money functions as which of the following?

• A) accepted resource
• B) measure of value
• C) store of value
• D) medium of exchange

Understand the necessity of including changes in net working capital in investment valuations.

Acknowledge the limitations of capital budgeting analyses due to the accuracy of future projections.

Grasp the significance of considering a project's impact on other business areas and the inclusion of opportunity costs and disposal proceeds in project evaluations.

Understand the concept of sunk costs and their irrelevance to future cash flows in capital budgeting decisions.

---

Definitions:

Marginal Product

The additional output gained by adding one more unit of a specific input, keeping all other inputs constant.

Economic Profit

The profit from an activity or business venture after subtracting both explicit and implicit costs, including opportunity costs.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.

Total Costs

The overall expense incurred in the production of goods or services, including both fixed and variable costs.