Use the Figure for the Question(s)below

question 21

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

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Definitions:

Expected Price Level

The future value that consumers and businesses anticipate for the average price of goods and services in the economy.

Actual Price Level

The current general price of goods and services in the economy, not adjusted for inflation.

Short-Run Aggregate Supply

The overall quantity of products and services that companies intend to offer for sale within a brief period, based on existing prices.

Aggregate Demand

Overall market demand for goods and services in an economy, determined at a prevailing comprehensive price level for a certain duration.