Jim and Lisa Own a Dog-Grooming Business in Champlain, New

question 26

Multiple Choice

Jim and Lisa own a dog-grooming business in Champlain, New York, called JL Groomers. There are many buyers and many sellers in the dog-grooming service market. JL Groomers experiences normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. JL Groomers will make zero economic profits if the market price is:

• A) $14.
• B) between $14 and $22.
• C) below $14.
• D) $22.
• E) above $14.

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Definitions:

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculated by subtracting the present value of cash outflows from the present value of cash inflows.

Sales Forecast

An estimate of the amount of sales that a company expects to achieve in a certain period.

Discount Rate

The interest rate used to discount future cash flow to its present value, reflecting the time value of money and risk of the cash flow.

Project Life

The total duration from the initiation to the completion of a project, covering all stages of development and execution.