Derek Is Preparing a Budget for His Research Project, and the Institute

question 63

Multiple Choice

Derek is preparing a budget for his research project, and the institute he is submitting the proposal to receives many funding proposals. Which of the following budgeting guidelines should Derek follow?

• A) Always ask for as little as possible, since the lower the budget, the higher the chance of approval.
• B) Be sure to justify costs such as travel that may appear to benefit him more than the sponsor.
• C) Costs pertaining to travel and equipment should be ignored.
• D) Avoid including indirect costs for administration and infrastructure.
• E) Do not include costs that will be paid from other sources.

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Definitions:

Higher Opportunity Cost

The increased potential loss of choosing one option over another, indicating a sacrifice of higher value alternatives.

Absolute Advantage

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Comparative Advantage

The capacity of a nation, person, business, or area to generate a product or offer a service with a smaller opportunity cost compared to its rivals.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.