The Production Department Is Proposing the Purchase of an Automatic

question 60

Multiple Choice

The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and has asked the accountant to analyze them to determine the best average rate of return.

• A) Machine B
• B) Machine C
• C) Machine B or C
• D) Machine A

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Definitions:

Exit the Industry

The process by which a business ceases operations in a particular market or industry, usually due to economic pressures or lack of profitability.

Zero Economic Profit

A situation in which a firm's total revenues equal its total costs, earning a normal profit but no economic profit.

Perfectly Competitive

A market structure characterized by many sellers, homogeneous products, and free entry and exit, leading to price determination by supply and demand.

Long-Run Industry Supply Curve

The long-run industry supply curve shows how the quantity supplied by an industry varies with price once all adjustment has been made, including the entry and exit of firms.