Which Equation Is TRUE

question 69

Multiple Choice

Which equation is TRUE?

• A) private cost + average cost = social cost
• B) social cost = private cost + external cost
• C) external cost = private cost
• D) private cost + social cost = external cost

---

Definitions:

Operating Costs

The expenses associated with the day-to-day functions of a business, including costs for rent, utilities, maintenance, and administration.

Discount Rate

The interest rate used to discount future cash flows to their present values, reflecting the opportunity cost of capital.

Project Profitability Index

A measure used to evaluate the attractiveness of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.

Initial Investments

The upfront money used to fund a new project, purchase a company, or make an investment, typically associated with starting costs.