Which of the Following Costs Would Not Be Included in the Net

question 123

Multiple Choice

Which of the following costs would not be included in the net present value analysis?

• A) Depreciation costs
• B) Acquisition costs
• C) Installation costs
• D) Incremental operating costs

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Definitions:

Economic Profits

Profits exceeding the total costs of resources used, including both explicit and implicit costs.

Opportunity Costs

The financial loss associated with overlooking the alternative that is considered second-best when making a choice.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the total quantity of output produced.

Competitive Market

A market structure characterized by a large number of sellers and buyers, free entry and exit, and products that are similar enough to be considered substitutes, leading to price competition.