Final answer:
A decision involving choosing among alternative capital investment opportunities is known as a capital decision. It involves intertemporal decision making, where decisions are made across time with focus on long-term returns, and may also use cost/benefit analysis to guide choices. The correct answer is capital decision.
Step-by-step explanation:
The decision that requires managers to choose from among a set of alternative capital investment opportunities is called a capital decision. This is an aspect of intertemporal decision making, which refers to the process where decisions are spread across different periods of time. Making a capital decision often involves analyzing the potential for returns over a long period, making it distinct from everyday consumption decisions.
As participants in financial markets assess when they want to consume goods—now or in the future—they engage in intertemporal decision making. This is integral to investment and savings decisions, which is why capital decisions carry significant weight. Along with this process, managers may utilize a cost/benefit analysis to compare the marginal costs and marginal benefits of additional units or alternatives, helping to determine the most advantageous course of action.