If the Marginal Benefit Received from a Good Is Greater

question 189

Multiple Choice

If the marginal benefit received from a good is greater than the marginal cost of production, then:

• A) society's well-being can be improved if production decreases.
• B) society's well-being cannot be improved by changing production.
• C) the market is producing too much of the good.
• D) the market is producing too little of the good.

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Definitions:

Payback Method

A capital budgeting method that calculates the time needed to recoup the initial investment from the cash inflows.

Time Value Of Money

The idea that money in hand now is more valuable than the same amount in the future because of its ability to generate earnings.

Liquidity Bias

A preference or bias for investments that can be quickly converted into cash without significant loss in value.

Arbitrary Cut-Off

A subjective or chosen without any specific standard or rule, end point or threshold.