The cost-effectiveness constraint requires that standard setting bodies choose rules that
A)have decision-making benefits that exceed the costs of providing the information.
B)have revenue generating ability.
C)have revenue generating ability that exceeds the cost of providing the information.
D)have costs known to the SEC.
E)are not costly to implement.

Question

Quizplus · Accepted Answer

The cost-effectiveness constraint requires that the benefits of the standard exceed the costs of providing the information. Therefore, option A is the correct choice. Option B and C are incorrect as revenue-generating ability is not a determining factor for standard setting bodies. Option D is incorrect as costs being known to the SEC is not a determining factor for standard setting. Option E is also incorrect as cost-effectiveness does not necessarily mean that the standard should not cost anything to implement, but rather the benefits should exceed the costs.

The Cost-Effectiveness Constraint Requires That Standard Setting Bodies Choose Rules