Which of the Following Is Correct About the Payback Method

question 28

Multiple Choice

Which of the following is correct about the payback method?

• A) It considers only the cash flows that occur during the payback period.
• B) It considers an asset's profitability.
• C) It is normally the only method used when deciding whether to invest in an asset.
• D) It is difficult to calculate.

Understand the concepts of average and marginal tax rates and their application.

Grasp the impact of elasticity on the incidence of excise taxes.

Understand the principles of tax progressivity, regressivity, and proportionality.

Understand the various sources of government revenue.

---

Definitions:

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, and insurance payments.

Losing Money

Losing money describes a situation where an individual or business expends more money than is received over a certain period, resulting in financial loss.

Average Variable Cost

The sum of all costs that vary with output levels, divided by the total number of units produced.

Marginal Cost

The increase or decrease in total production cost when producing one additional unit of a good.