A Rational Decision Maker Takes an Action Only If The

question 101

Multiple Choice

A rational decision maker takes an action only if the:

• A)marginal benefit is greater than the marginal cost
• B)marginal benefit is less than the marginal cost
• C)average benefit is greater than the average cost
• D)marginal benefit is greater than both the average cost and the marginal cost

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Definitions:

Compounded Annually

Refers to the process of calculating and adding interest to the principal amount of an investment or loan once per year.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow funds over a similar term, and with a similar security, to lease a comparable asset.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a particular point in time, showing assets, liabilities, and shareholders' equity.

Liability Reported

The documentation in financial accounting of any debts or financial obligations a company is responsible for.