The Saying "There's No Such Thing as a Free Lunch

question 260

Multiple Choice

The saying "There's no such thing as a free lunch," applies

• A) when there is some unemployment.
• B) on the production possibilities frontier.
• C) to unattainable combinations of goods and services.
• D) when more of one good can be produced without decreasing production of another.
• E) at all points inside the PPF.

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Definitions:

Required Rate

The minimum return that investors demand for investing in a particular asset, reflecting the risk of the investment.

Discounted Payback Period

A capital budgeting method that calculates the amount of time needed to break even from an investment in present value terms, factoring in the time value of money.

Discount Rate

In discounted cash flow analysis, it's the rate of interest used for calculating the present day value of future financial inflows.

Cash Flows

The sum of all money transactions both incoming and outgoing in an establishment, affecting its ability to maintain liquid resources.