Which of the Following Statements Is FALSE

question 67

Multiple Choice

Which of the following statements is FALSE?

• A)Because value is lost when a resource is used by another project,we should include the opportunity cost as an incremental cost of the project.
• B)Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis.
• C)Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation.
• D)When computing the incremental earnings of an investment decision,we should include all changes between the firm's earnings with the project versus without the project.

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Definitions:

Price Level

A measure that reflects the average prices of goods and services in an economy at a given time.

Nominal GDP

The market value of all final goods and services produced in a country in a given period, measured in current prices.

GDP Deflator

An index measuring the change in prices of all new, domestically produced goods and services in an economy.

Real Output

The total value of all goods and services produced in an economy, adjusted for inflation, reflecting the actual productivity rather than nominal figures.