Question

By evaluating cost and benefits using competitive market prices, we can determine whether a decision will make the firm and its investors wealthier. This central concept is called:

Answer 1

valuation principle

Step-by-step explanation:

The basis concept behind the valuation principle is that the value of an asset is determined by the market. If an investor is evaluating any type of new project, he/she must use market prices in order to determine whether this new project will make him/her wealthier. E.g. the price of art works is determined by the amount of money that someone is willing to pay for it, not by the fact that you like it or not.