In a Market Economy, fiRms Move Resources into the Production

question 52

True/False

In a market economy, firms move resources into the production of goods for which consumers' willingness to pay is relatively low.

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Definitions:

Break-Even Time

The period it takes for a business or project to recover its costs, reaching a financial break-even point.

Payback Period

The payback period is the time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time, used to assess the profitability of an investment.

Payback Period Method

A simple calculation that divides the initial investment by the annual cash inflows to determine how long it will take to recoup the initial investment.