If Net Present Value Is Negative, It Means That the Return

question 12

Multiple Choice

If net present value is negative, it means that the return on the investment is

• A) less than the discount rate.
• B) more than the discount rate.
• C) equal to the discount rate.
• D) acceptable.
• E) meaningless since the return on the investment bears no relationship to the discount rate.

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Definitions:

Monopoly

A market structure characterized by a single seller, selling a unique product in the market. In a monopoly, the seller faces no competition, as he is the sole seller of goods with no close substitute.

Economies of Scale

Companies experience a decrease in the average cost of production as they scale up their operations, resulting in cost efficiencies.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, one firm can supply the entire market more efficiently than if there were multiple firms.

Total Demand

Total demand represents the entire quantity of a particular good or service that all consumers in a market are willing to purchase at various price points over a specific time frame.