Which of the Following Is Correct

question 180

Multiple Choice

Which of the following is correct?

• A)Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
• B)Equity can be judged on positive grounds whereas efficiency requires normative judgments.
• C)Efficiency is more difficult to evaluate than equity.
• D)Equity and efficiency are both maximized in a society when total surplus is maximized.

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Definitions:

Asset's Economic Life

The period over which an asset is expected to be economically useful to the owner.

Inception Date

The date on which an agreement, policy, or financial instrument becomes effective or is entered into.

Fair Value

A projected price for an asset or liability that could be transferred between agreeable, well-informed participants in a transaction that is free from any special relationship.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in evaluating investment opportunities.