Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)Problems can arise using the IRR method when the mutually exclusive investments have different cash flow patterns.
• B)The IRR is affected by the scale of the investment opportunity.
• C)Multiple incremental IRRs might exist.
• D)The incremental IRR rule assumes that the riskiness of the two projects is the same.

---

Definitions:

Inferior Good

A type of good for which demand decreases as the income of consumers increases, in contrast to a normal good.

Equilibrium Price

The cost at which the amount of a product or service consumers want to buy matches the amount that manufacturers are willing to sell.

Equilibrium Quantity

The quantity of goods or services that is supplied is exactly equal to the quantity demanded at the equilibrium price.

Commodity X

A placeholder term for any generic, interchangeable good or service in economic analysis.