Which of the Following Is a Disadvantage of Both Residual

question 13

Multiple Choice

Which of the following is a disadvantage of both residual income and ROI?

• A)They are both absolute measures of return.
• B)They both are difficult to calculate.
• C)They both do not discourage myopic behaviour.
• D)All of the above are disadvantages of both ROI and residual income.

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Definitions:

Net Social Cost

The total monetary cost of the negative externalities produced by an activity or production, minus any benefits.

Rent-Seeking Behavior

Activities aimed at increasing one's share of existing wealth without creating new wealth, often through manipulation or exploitation of the economic environment.

Profits

The financial gain realized when the revenue from selling goods or services exceeds the costs of production.

Monopolized

Refers to a market structure where a single firm or entity controls a significant portion of the market share, reducing competition.