Use the Figure for the Question(s)below

question 66

Multiple Choice

Use the figure for the question(s) below.
-The graph above shows the break-even analysis for the cost of making a certain good.Based on this chart,which of the following is TRUE?

• A)The net present value (NP
• V)of the project increases with increased cost of goods sold.
• B)The project should not be undertaken if the predicted cost of goods sold is less than $110.
• C)The net present value (NP
• V)of the project will be positive if the cost of good sold is greater than $110.
• D)If the good costs $110 to make,the net present value (NP
• V)of the project will be zero.
• E)The cost of goods sold should not be a factor in deciding whether to undertake the project.

---

Definitions:

Proportional

Pertaining to a relationship where changes in one quantity result in proportional changes in another quantity.

Elasticity

A measure of how much the quantity demanded or supplied of a good or service changes in response to a change in its price.

Efficiency Loss

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Demand and Supply

The fundamental concepts of economics that demonstrate how the quantity of goods or services demanded by consumers relates to the quantity supplied by producers at various prices.