​Use the Following Setup for Question

question 23

Multiple Choice

​Use the following setup for question
A cloth manufacturing firm is deciding whether or not to invest in new machinery.The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000.The firm's current fixed costs are $9,000 and current marginal cost are $15.The firm currently charges $18 per unit.
-​A catering company is producing at a point where its marginal costs are $25 and its fixed costs are $5000.At the current price of $10 it is producing 50 meals.If the demand goes up,such that they can now charge $20 per meal,how much should the firm now produce?

• A)​60 meals
• B)70 meals
• C)80 meals
• D)​None,they should shut down

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Definitions:

Pension Benefit Guarantee Corporation

A U.S. government agency that protects the retirement incomes of American workers by insuring defined-benefit pension plans.

Defined-Benefit Retirement Plan

A type of pension plan where an employer promises a specified retirement benefit to employees based on a formula, typically involving years of service and salary history.

Pension Benefit Guarantee Corporation

A U.S. federal agency that protects the pension benefits in private-sector defined benefit plans if the company fails to meet its pension obligations.

Stock Market

A public market for the trading of company stock and derivatives at an agreed price; it is a key indicator of the health of an economy.