The Benefit-Cost Ratio Is Defined as the Ratio of

question 70

Multiple Choice

The benefit-cost ratio is defined as the ratio of

• A)net present value cash flows to initial investment.
• B)present value of cash flows to initial investment.
• C)net present value of cash flows to IRR.
• D)present value of cash flows to IRR.

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Definitions:

Surplus

The amount of a good that is available exceeds the quantity demanded at the current price.

Price

Price is the amount of money required to purchase a good or service, determined by factors such as supply and demand, production costs, and market competition.

Surplus

Surplus refers to the situation where the quantity of a good or service supplied exceeds the quantity demanded, often leading to a decrease in prices.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service and the actual price they receive, reflecting the profit earned above production costs.