A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by $2,000 in the first year, $2,500 in the second, and $3,000 in the third and final year of usefulness. The tractor costs $9,000 today, while the above cost savings will be realized at the end of each year. If the interest rate is 7 percent, what is the net present value of purchasing the tractor?
A. $6,764
B. $18,362
C. $9,362
D. None of the statements associated with this question are correct.
Answer: D
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A monopoly:
A. is a price taker. B. faces competition from other firms producing close substitutes. C. restricts its output. D. sets a low price by controlling the level of output.
Which of the following best explains why making automobiles completely safe is not efficient?
a. After some level of safety is reached, making cars even safer will not be worth the additional cost. b. Because human life is priceless, automobile safety generally doesn't matter. c. The benefit from additional automobile safety will generally rise as automobiles are made safer, more than offsetting the opportunity cost involved. d. Economic efficiency suggests that automobiles should be made as safe as humanly possible.
Refer to the following graphs to answer the question below.
Select the graph that best shows the changes in demand and supply in the beef market if a new diet fad favoring beef consumption becomes hugely popular, while cattle producers see steeply rising costs of cattle feed.
A. graph (1) B. graph (2) C. graph (3) D. graph (4)
A common fallacy that is used to oppose trade is the idea that
A. the only gains from trade go to the rich, so the poor must lose. B. “you get what you pay for.” C. “if it’s not broken, don’t fix it.” D. one country’s gain must be another’s loss. E. what is true for one is true for all.