If a Machine Cost $50,000 Initially and Is Expected to Last

question 4

Multiple Choice

If a machine cost $50,000 initially and is expected to last for 20 years but is worth $60,000 after one year because it is in short supply, an economist most likely would say that:

• A) the machine's cost for each of its 20 years of existence is $2,500.
• B) the machine's cost for each of its 20 years of existence is $3,000.
• C) during the first year the machine had no cost; it provides an implicit revenue of $10,000 to the firm.
• D) the value of the machine will continue to increase 20 percent per year for the next 20 years.

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