The Cost-Benefit Principle States That a Consumer Will Be Better

question 63

Multiple Choice

The cost-benefit principle states that a consumer will be better off to follow a particular course of action,only if the

• A) total benefits increase.
• B) total costs decrease.
• C) total costs remain unchanged.
• D) extra benefits from taking the action are at least equal to the extra costs.
• E) total benefits do not decreasE.

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Definitions:

Simple Rate of Return

A financial metric calculating the increase in cash flow an investment generates, compared to its initial cost, not accounting for time value of money.

Depreciation Expense

The charged amount representing the usage of fixed assets attributed to business operations over a period.

Incremental Expenses

Incremental expenses are the additional costs incurred when a company increases its production or activities beyond its current levels.

Payback Method

A financial analysis tool used to determine the time required to recover the cost of an investment.