Exhibit 13-3 -Exhibit 13-3 Gives Data on the Number of Tools a Number

question 41

Multiple Choice

Exhibit 13-3

-Exhibit 13-3 gives data on the number of tools a certain firm buys to use in its production process. Assume that the tools are expected to last indefinitely, that operating expenses are negligible, and that the price of the firm's output is expected to remain constant in the future. At an interest rate of 7 percent, the firm in Exhibit 13-3 should select

• A) the maximum number of tools available because price does not decrease as output increases
• B) the minimum number of tools available because price does not increase as output increases
• C) three tools
• D) four tools
• E) five tools

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