The NPV Approach Must Be

question 39

Multiple Choice

The NPV approach must be:

• A)augmented by added analysis if there are a few embedded options.
• B)augmented by added analysis if a decision has significant embedded options.
• C)jettisoned if there are any embedded options.
• D)computed carefully to identify the options.
• E)None of the above.

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Definitions:

Negative Externality

Occurs when a decision by an individual or firm results in unwanted negative effects on another party not involved in the decision.

MSC (Marginal Social Cost)

The total cost to society of producing an additional unit of a good or service, including both private costs and any externalities.

Positive Externality

A benefit received by individuals or society at large from an economic transaction in which they were not directly involved.

Vaccinating

The act of administering a vaccine to help the immune system develop protection from a disease.