The president of XYZ, Incorporated is considering the purchase of new equipment. The equipment is expected to increase profits by $25,000 per year for four years. After that, the equipment will have no value
If the machine costs $80,000 and the market rate of interest is 6 percent, should your firm purchase the machine? Explain.
Yes. The present value of the income stream is ($25,000/1.06) + ($25,000/1.1236) + ($25,000/1.191016) + ($25,000/1.262477) = $23,584.91 + $22,249.91 + $20,990.48 + $19,802.34 = $86,627.64 . Since the cost of the equipment is less than the present value of the income stream, the equipment should be purchased.
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An increase in demand involves
A) Movement along the demand curve. B) A shift in the supply curve to the right. C) A shift in the demand curve to the left. D) None of the above.
Total world output can increase without the addition of resources if
A. countries specialize in the product in which they have an absolute advantage and trade for products in which they have an absolute disadvantage. B. countries specialize in the product in which they have a comparative advantage and trade for products in which they have a comparative disadvantage. C. countries impose tariffs on the goods in which they have a comparative advantage. D. countries replace tariffs with quotas.
Define discrimination. Why does discrimination occur, and what evidence exists that it does occur?
What will be an ideal response?
If the compensated (Hicks) and Marshall demand curves for a good intersect, at that point the Marshall curve will be:
a. flatter if this is a normal good. b. steeper if this is a normal good. c. flatter if this is an inferior good. d. horizontal.