A Company Decided to Replace an Old Machine with a New

question 38

Multiple Choice

A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

• A) the book value of the old equipment
• B) the depreciation expense on the old equipment
• C) the loss on the disposal of the old equipment
• D) the setup cost of the new equipment

---

Definitions:

Consumption Bundle

A set of goods or services that an individual considers purchasing, given their income and the prices of those goods/services.

Indifference Curves

Graphs representing different combinations of goods that give a consumer equal levels of satisfaction, thereby indicating their preferences.

Bundle

A combination of different goods or services that are sold together as a single package.

Indifference Curves

Graphical representations in microeconomics that show combinations of two goods among which a consumer is indifferent, meaning they have no preference for one combination over the other.