The Most Critical Use for Project Portfolio Analysis Is To

question 114

Multiple Choice

The most critical use for project portfolio analysis is to:

• A) Compare the net value of a new project relative to continuing previously approved projects
• B) Determine the best time to start a new project
• C) Assess the feasibility of starting a new project relative to the resources being allocated to existing projects as well as assessing the strategic fit of the new project
• D) Make room for a new project by canceling or postponing an existing project that will not produce as high an ROI as the new project

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Definitions:

Allocative Efficiency

A state of the economy in which production is in accordance with consumer preferences; every good or service is produced up to the point where the last unit provides a utility to consumers equal to the cost of producing it.

Consumer Surplus

The difference in the amount consumers are prepared and have the means to pay for a service or good compared to the amount they actually do pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, often depicted as the area above the supply curve and below the market price.

Average Cost

The total cost of production divided by the number of goods produced; also known as per unit cost.