Which of the Following Best Explains Why Making Air Travel

question 123

Multiple Choice

Which of the following best explains why making air travel completely safe is not efficient?

• A) After some level of safety is reached, making airplanes even safer is not worth the opportunity cost that would be incurred.
• B) Because one can't put a price on human life, airplane safety generally doesn't matter economically.
• C) The benefit from additional airplane safety will generally rise as airplanes are made safer, more than offsetting the opportunity cost involved.
• D) The question is misleading--making airplanes safer is always efficient.

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Definitions:

CAP

An abbreviation often referring to the "Capitalization" of a company, which is the sum of a company's stock, long-term debt, and retained earnings.

FASB

The Financial Accounting Standards Board, a private, non-profit organization standard setter, which establishes the generally accepted accounting principles (GAAP) within the United States.

Agency Theory

A framework that analyzes the relationship and conflicts between principals (owners) and agents (managers) in a corporation, focusing on how to align their interests.

Managers' Behavior

The actions and decisions made by managers in the course of operating a business, which can significantly impact the company's performance and culture.