In General, Sensitivity Analysis Can Be Described as

question 15

Multiple Choice

In general, sensitivity analysis can be described as

• A)establishing the range of variations in the key parameters of a project.
• B)gaining a better understanding of how cash flows affect a project's performance.
• C)predicting profitability of a project.
• D)establishing the impacts of uncertainty in a project's inputs on its economic performance.
• E)establishing the level of data errors.

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Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, achieving a state of market balance.

Consumer Surplus

The division between the total financial commitment consumers are willing to make for a product or service and the amount they actually contribute.

Price Floor

A minimum legal price set by the government at which a good or service can be sold, aiming to prevent prices from falling too low.

Consumer Surplus

The contrast between the intended financial outlay of consumers on a good or service and the payment they ultimately make.