A Project That Simply Breaks Even on an Accounting Basis

question 63

True/False

A project that simply breaks even on an accounting basis gives you your money back but does not cover the opportunity cost of the capital tied up in the project.

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Definitions:

Equilibrium Quantity

The quantity of goods or services traded in a market at the equilibrium price, where the quantity supplied equals the quantity demanded.

External Cost

A cost borne by someone who does not participate in the transaction or decision that led to the cost, often associated with negative externalities.

Total Surplus

The sum of consumer and producer surplus in a market, indicating the overall economic benefit to society from market transactions.

Socially Efficient

An economic condition where the allocation of resources maximizes social welfare, often where marginal cost meets marginal benefit.