George Gnat Subscribes to a Monthly Pest Control Service for His

question 119

Multiple Choice

George Gnat subscribes to a monthly pest control service for his home.Last week the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips.How is the market for pest control services affected by this?

• A)There is an increase in the supply of pest control services.
• B)There is a decrease in the demand for pest control services.
• C)There is a decrease in the quantity supplied of pest control services.
• D)There is a decrease in the supply of pest control services.

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Definitions:

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period.

Capital Budgeting

The process of making long-term planning decisions for investment projects, evaluating their potential profitability and financial impact.

Straight-Line Depreciation

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Net Present Value

The difference between the present value of cash inflows and outflows over a period, used in capital budgeting to assess the profitability of an investment.