If Inflation Is Making It Difficult for People to Estimate

question 73

Multiple Choice

If inflation is making it difficult for people to estimate the true marginal benefits and true marginal costs of activities, inflation is leading to

• A) tax costs.
• B) shoe-leather costs.
• C) confusion costs.
• D) uncertainty costs.
• E) increased economic growth.

---

Definitions:

Opportunity Cost

The value of the best alternative that is forgone when a particular decision is made, representing the benefits that could have been received from that alternative.

Transfer Price

The price charged when one responsibility center within a company provides goods or services to another responsibility center in the same company.

Return On Investment

A measure used to evaluate the efficiency of an investment or compare the efficiency of several different investments, calculated by dividing the benefit (return) of an investment by the cost of the investment.

Performance Measure

Indicators used to evaluate the efficiency, effectiveness, or success of an organization or individual in achieving objectives.