The Practice of Estimating Willingness to Accept

question 3

Multiple Choice

The practice of estimating willingness to accept

• A) asks how much compensation people require for a reduction in environmental quality.
• B) asks how much respondents are willing to pay for a reduction in environmental quality.
• C) is constrained by a respondents' ability to pay.
• D) is typically equivalent to a respondent's willingness to pay.

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Definitions:

Return On Investment

A financial ratio used to calculate the profitability of an investment, comparing the gain from an investment relative to its cost.

Residual Income

The income that remains after subtracting from the net operating income the cost of capital charged for utilizing the capital in generating the net operating income.

Minimum Required Rate

The lowest acceptable rate of return on an investment, often used in the context of capital budgeting.

Investment Opportunity

A chance to invest capital in a project or asset with the expectation of generating a favorable return on investment.