Going Skiing Will Cost Adam $80 a Day

question 205

Multiple Choice

Going skiing will cost Adam $80 a day.He also loses $40 per day in wages because he has to take time off from work.Yet,Adam still decides to go skiing.

• A)His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost.
• B)He loses a total of $120 per day,so his decision is irrational.
• C)The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision.
• D)Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision.
• E)Adam is definitely making a decision that is in the social interest.

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Definitions:

Cash Flows

This refers to the total amount of money being transferred into and out of a business, affecting the company's liquidity.

Adjusted Trial Balance

A trial balance prepared after all adjustments, including accruals and deferrals, have been made to ensure debits equal credits before financial statements are prepared.

Comparative Balance Sheets

Financial statements that present the financial position of a company at different points in time for comparison.

Current Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period.