Suppose That a University Decides to Spend $1 Million to Upgrade

question 169

Multiple Choice

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates

• A) distorted priorities.
• B) opportunity costs.
• C) increasing opportunity costs.
• D) productive efficiency.

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Definitions:

Required Return

The minimum expected return an investor seeks on an investment, considering the risk associated with it.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue is contributing to fixed costs and profit.

Annual Fixed Costs

The total of all business expenses that are constant and do not change with the level of goods or services produced within a given time period, typically a year.