The Expected Marginal Benefit to You from Purchasing a New

question 181

Multiple Choice

The expected marginal benefit to you from purchasing a new sport utility vehicle is $30 000. If the price of the new sport utility vehicle is $32 000, what will you do?

• A) If you are acting rationally, you will borrow $2000 and purchase a new sport utility vehicle.
• B) You will not purchase the new sport utility vehicle at this time if you are acting rationally.
• C) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $30 000.
• D) If you do not purchase the new sport utility vehicle, your net loss will be $2000.

---

Definitions:

Cash Flow

The movement of funds into and out of a business or project, critical for maintaining operations and investment activities.

Operating Section

Part of a company's financial statement (specifically, the cash flow statement) that reports on the cash activities related to its primary operations, such as cash receipts and payments from goods and services.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and not expected to be consumed or converted into cash within a year.

Statement of Cash Flows

A financial report showing the cash inflows and outflows from operating, investing, and financing activities over a period.