Which of the Following Statements Is False

question 27

Multiple Choice

Which of the following statements is false?

• A) Because value is lost when a resource is used by another project, we should include the opportunity cost as an incremental cost of the project.
• B) Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis.
• C) Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation.
• D) When computing the incremental earnings of an investment decision, we should include all changes between the firm's earnings with the project versus those without the project.

---

Definitions:

Absolute Advantage

A situation in which a country, individual, or company can produce a good at a lower cost per unit than competitors.

Opportunity Cost

The price paid for not choosing the second-best option during decision-making.

Higher Opportunity Cost

The increased potential loss of choosing one option over another, indicating a sacrifice of higher value alternatives.

Absolute Advantage

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.