Sala Co Is Contemplating the Replacement of an Old Machine with with a New

question 201

Multiple Choice

Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: If the old machine is replaced, it can be sold for $24,000.
The net advantage (disadvantage) of replacing the old machine is

• A) $18,000
• B) $24,000
• C) $(6,000)
• D) $(60,000)

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Definitions:

Quantity Demanded

The amount of a good or service that buyers are willing and able to purchase at a specific price, holding all other factors constant.

Supply Pizza

Represents the total quantities of pizza that sellers are willing and able to provide at various prices within a given market.

Excess Supply

Excess supply, also known as surplus, occurs when the quantity of a good or service offered for sale exceeds the quantity demanded at the current price.

Market Equilibrium

The condition in which the quantity of a good supplied is equal to the quantity demanded, resulting in no economic pressure to change the price or quantity.