Some Investment Opportunities That Should Be Accepted from the Viewpoint

question 253

Multiple Choice

Some investment opportunities that should be accepted from the viewpoint of the entire company may be rejected by a manager who is evaluated on the basis of:

• A) return on investment.
• B) residual income.
• C) contribution margin.
• D) segment margin.

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Definitions:

Allocative Efficiency

A state of the economy in which production represents consumer preferences; every good or service is produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.

Producer Surplus

The variance between the price producers are willing to take for a good or service and the price they end up receiving.

Consumer Surplus

The discrepancy between the price consumers are ready to offer for a good or service and the price they end up paying.

Marginal Benefit

The enhanced enjoyment or utility gained from the consumption of one extra unit of a good or service.