Why Might the Following Quote Not Make Economic Sense: "The

question 382

Multiple Choice

Why might the following quote not make economic sense: "The round of golf I just finished was so much fun and worth the money that I should play another round before going back to work"?

• A) The marginal benefit of the second round of golf in the same day is likely to be less than the first round.
• B) The total benefit from both rounds of golf is likely to be smaller than just the first round.
• C) The opportunity cost of the second round from not going to work is likely to be smaller than the opportunity cost of the first round.
• D) The total cost of playing both rounds of golf is likely to be smaller than just the first round.

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Definitions:

Useful Life

The estimated period an asset is expected to be used before it is deemed no longer useful for operations.

Units-Of-Activity

A depreciation method that allocates cost based on the actual usage, work performed, or units produced by an asset.

Asset’s Use

The utilization of an asset in a way that enhances its value or contributes to earning revenue.

Manufacturing Company

A company that uses raw materials, labor, and equipment to produce finished goods on a large scale.