Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10,000 for the year. The machine costs $8,000 and has a useful life of one year. The interest rate is 20 percent. This investment should:
A. Be undertaken because the rate of return is 2 percent greater than the interest rate
B. Be undertaken because the rate of return is 5 percent greater than the interest rate
C. Be undertaken because the rate of return is 7 percent greater than the interest rate
D. Not be undertaken because the rate of return is 7 percent less than the interest rate
B. Be undertaken because the rate of return is 5 percent greater than the interest rate
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An upward shift of the planned expenditure curve resulting from a decrease in the price level corresponds to
A) aggregate demand shifting to the left. B) a movement up along the aggregate demand curve. C) a movement down along the aggregate demand curve. D) aggregate demand shifting to the right.
The above figure shows the U.S. market for flip-flops. With international trade, the United States imports ________ flip-flops
A) 400,000 B) 0 because the United States exports flip-flops C) 700,000 D) 300,000 E) 500,000
A market is perfectly competitive if
A) each firm in it can influence the price of its product. B) there are many firms in it, each selling a slightly different product. C) there are many firms in it, each selling an identical product. D) there are few firms in the market.
The kinked-demand curve is based upon the assumption that an oligopolist's rivals will:
A. follow both a price cut and a price increase. B. follow a price cut, but ignore a price increase. C. ignore a price cut but follow a price increase. D. ignore both a price cut and a price increase.