The Potential Decision to Abandon a Project Has Option Value

question 88

Multiple Choice

The potential decision to abandon a project has option value because:

• A)abandonment can occur at any future point in time.
• B)a project may be worth more dead than alive.
• C)management is not locked into a negative outcome.
• D)All of the above.
• E)None of the above.

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Definitions:

Private Goods

Goods that are rivalrous and excludable, meaning one person's consumption prevents another's.

Club Goods

Goods that are excludable but non-rival in consumption, meaning they can have restricted access but one person's use does not diminish availability to others.

Prevented

Describes a situation or action that has been stopped or hindered from occurring, often through intervention or precautionary measures.

Club Good

A type of good that is excludable but non-rivalrous, meaning that access can be restricted but one person's use does not diminish availability for others.