Theresa Is Analyzing a Project That Currently Has a Projected

question 29

Multiple Choice

Theresa is analyzing a project that currently has a projected NPV of zero.Which of the following changes that she is considering will help that project produce a positive NPV instead? Consider each change independently.
I.increase the quantity sold
II.decrease the fixed leasing cost for equipment
III.decrease the labor hours needed to produce one unit
IV.increase the sales price

• A)I and II only
• B)I and IV only
• C)II, III, and IV only
• D)I, II, and IV only
• E)I, II, III, and IV

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Definitions:

Purely Competitive Market

A market structure characterized by many buyers and sellers, freedom of entry and exit, and a product that is homogeneous across producers.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded; the market price where no surplus or shortage exists.

Marginal Revenue

The additional income earned from selling one more unit of a good or service; it's a crucial concept for understanding how firms decide on output levels.

Purely Competitive Industry

An industry characterized by a large number of small firms producing identical products with no single firm able to influence the market price.