How is net present value used to decide whether a project should be undertaken or not?
What will be an ideal response?
The net present value of a project is the sum of all the costs and benefits associated with a project, using present values to make the costs and benefits comparable. A project should be undertaken when the net present value of the project is positive. For a project with negative net present value, the upfront cost of the project exceeds the discounted value of the future benefits from the project.
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"The marginal social cost of burning garbage in Houston is the sum of the marginal private cost and the marginal external cost." Is this assertion correct or incorrect?
What will be an ideal response?
The substitution effect of a real wage increase is observed when
A) the higher wage causes workers to take more leisure and work more hours. B) the higher wage causes workers to take more leisure and work fewer hours. C) leisure's higher opportunity cost causes workers to take less leisure and work more hours. D) leisure's higher opportunity cost causes workers to take more leisure and work fewer hours.