James Is Considering Replacing His Worn-Out Machines

question 32

Multiple Choice

James is considering replacing his worn-out machines. Which of the following is not a relevant cost for James when considering various available options?

• A) Costs of electricity consumed by current machines
• B) Changes in costs of labour needed to operate the new machines
• C) Costs of delivering the new machine
• D) Costs of replacing old machines

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Definitions:

Price Elasticity

The evaluation of demand's reaction to fluctuations in the price of a particular good.

Responsiveness

The degree to which a variable responds to a change in an underlying factor, often used in economic contexts to describe changes in supply, demand, price, etc.

Price Elasticity

A measure of how much the quantity demanded or supplied of a product changes in response to a change in its price.

Inelastic

A description of a situation where the quantity demanded or supplied changes by a smaller percentage than the changes in price.