Management of Plascencia Corporation Is Considering Whether to Purchase a New

question 179

Multiple Choice

Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $446,000 or a new model 220 machine costing $408,000 to replace a machine that was purchased 9 years ago for $426,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L.Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $408,000 in the new machine, the money could be invested in a project that would return a total of $20,000.In making the decision to buy the model 220 machine rather than the model 370 machine, the differential cost was:

• A) $38,000
• B) $18,000
• C) $20,000
• D) $14,000

Comprehend the role and effect of automatic stabilizers in economic cycles.

Calculate the effects of changes in government spending and taxation using fiscal multipliers.

Identify fiscal policy measures for addressing budget deficits and national debt.

Evaluate the effectiveness and timing of fiscal stimulus packages.

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Definitions:

Positivity

The practice or tendency of being optimistic in attitude, focusing on the positive aspects of life.

Self-Concept Clarity

The extent to which an individual's beliefs about themselves are clearly and confidently defined, internally consistent, and stable over time.

Social Status

The position or rank of a person or group within the society.

Sociometer Model

A theoretical model suggesting that self-esteem is a gauge that measures the quality of our relationships with others.