To Account for Risk an Alternative to Adjusting the Discount

question 47

True/False

To account for risk an alternative to adjusting the discount rate is the certainty equivalent which adjusts the cash flows.

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Definitions:

(P - ATC)q

The formula representing profit in economic terms, where P stands for price, ATC for average total cost, and q for quantity produced or sold.

Total Revenue

The total receipts from sales of a firm's goods or services.

Marginal Revenue

The additional income generated from the sale of one more unit of a good or service.

Average Variable Cost

The total variable cost divided by the total output, representing the variable cost per unit of output.