Use the Information Below to Answer the Following Questions

question 23

Multiple Choice

Use the information below to answer the following questions.
Fact 10.2.1
Consider the following three methods of preparing your tax return. Method A uses a personal computer (cost equal to $1,000) and 1 hour of your time. Method B uses a calculator (cost equal to $30) and 12 hours of your time. Method C uses pen and paper (cost equal to $1) and 2 days (16 hours) of your time.
-Consider Fact 10.2.1. Choose the best statement.

• A)When your wage rate is $5 per hour, the economically efficient method is method C.
• B)When your wage rate is $50 per hour, the economically efficient method is method B.
• C)When your wage rate is $500 per hour, the economically efficient method is method A.
• D)all of the above
• E)B and C only

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Definitions:

Cash Burn

The rate at which a company spends its capital to finance overhead before generating positive cash flow from operations.

Cash Equivalents

Short-term, highly liquid investments with maturities of three months or less at the time of acquisition, easily convertible to known amounts of cash.

Monthly Cash Expenses

The total amount of money spent by a business in cash within a month for operational and administrative purposes.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible into known amounts of cash and have original maturities of three months or less.