If an Individual Makes Her Investment Decisions Based Solely on the Net

question 7

Multiple Choice

If an individual makes her investment decisions based solely on the Net Present Value criterion,one can conclude that she is

• A) risk averse.
• B) risk neutral.
• C) risk loving.
• D) extremely wealthy.

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Definitions:

MR

Marginal Revenue, the additional income earned from selling one more unit of a good or service.

Economic Profit

The excess of total revenue over the complete aggregation of both transparent and hidden costs.

Marginal Revenue

The supplementary income a company accrues from the sale of one additional unit of a product or service.

ATC

Average Total Cost, the total cost of production divided by the number of units produced, representing the average cost per unit of output.