Consider the Following Two Projects: Assume That Projects Alpha

question 59

Multiple Choice

Consider the following two projects: Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to ________.

• A) invest in project Beta, since NPV_Beta > 0
• B) invest in project Alpha, since NPV_Beta < NPV_Alpha
• C) invest in project Beta, since IRR_B > IRR_A
• D) invest in project Beta, since NPV_Beta > NPV_Alpha > 0

Evaluate the welfare outcomes of import quotas versus tariffs.

Predict the market responses to government-imposed taxes and quotas, including shifts in supply and demand curves.

Calculate the impact of taxes and subsidies on consumer and producer surplus.

Understand the concept of deadweight loss and its causes in the context of taxation and subsidies.

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Definitions:

Contribution Margin Report

A financial report that shows the difference between a company's sales revenue and variable costs, which contributes towards covering the company's fixed costs and generating profit.

Manufacturing Margin

The difference between the sales revenue of manufactured products and their production costs (excluding indirect costs).

Variable Costing

A costing method that includes only variable production costs (direct labor, direct materials, and variable manufacturing overhead) in product costs.

Absorption Costing

Accounting method that includes all manufacturing costs (direct costs, variable and fixed overhead) in the cost of a product.