Which of the Following Is Irrelevant When Making a Decision

question 35

Multiple Choice

Which of the following is irrelevant when making a decision?

• A)The original cost of an asset that the company is considering replacing
• B)The cost of further processing a product that could be sold as is
• C)The fixed overhead costs that differ among decision alternatives
• D)The expected increase in contribution margin of one product line as a result of a decision to drop a separate unprofitable product line

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Socialistic Economies

Economic systems where the production and distribution of goods and services are controlled by the state, aiming for equal wealth distribution and reduction of economic inequalities.

Central Planning

Describes an economic system where the government makes all decisions about the production and distribution of goods and services.

Production Possibilities

Refers to the different combinations of goods and services an economy can produce given its resources and technology.