If a Firm Needs One Machine to Produce a Product,and

question 101

Multiple Choice

If a firm needs one machine to produce a product,and must replace the machine when it wears out,then the firm should pick a durability level of the machine that

• A) minimizes the expense today.
• B) minimizes the present discounted cost of having the machine forever.
• C) maximizes the future value of the machine.
• D) minimizes the future value of the machine.

---

Definitions:

Long Run

Describes a period in which all factors of production and costs are variable, allowing for the adjustment of all inputs and technology by firms.

Fixed Resource

Refers to a factor of production that remains constant, regardless of the level of output or activity in the short term.

Short-Run Adjustment

A temporary change in production or operation to respond to immediate changes in market or environmental conditions.

Additional Bakers

Implies an increase in the number of bakers in a market or industry, potentially increasing the supply of baked goods.