The Firm in the Table Below Produces Denim Jeans and Each

question 55

Multiple Choice

The firm in the table below produces denim jeans and each unit of capital represents one sewing machine.The MRP for each of machines 10 through 14 is provided.Each sewing machine delivers a stream of MRPs beginning one year from now,for a total of 2 years.Assume that after 2 years each sewing machine is worth nothing. $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Sewing Machines }\end{array} & \text { Annual MRP } \\\hline 10 & \$ 2000 \\\hline 11 & \$ 1800 \\\hline 12 & \$ 1600 \\\hline 13 & \$ 1400 \\\hline 14 & \$ 1200 \\\hline\end{array}$$ TABLE 15- 2
-Refer to Table 15- 2.If the interest rate is 4% and the purchase price of a sewing machine is $2000,what is the optimal capital stock (number of sewing machines) for this firm?

• A)12
• B)11
• C)13
• D)exactly 14
• E)at least 14

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Definitions:

Randomly Contacting

The process of reaching out or communicating without a specific pattern or targeted system, often used in research or marketing.

Grapevine

An informal channel of communication in organizations or communities, characterized by the spontaneous and unofficial spreading of information and rumors.

Cluster Chain

A connected series of nodes, items, or locations, typically structured to improve processes, information flow, or distribution.

Grapevine

An informal communication network within an organization, where information is passed from person to person outside of official communication channels.