What Is the Approximate Maximum Amount That a Firm Should

question 70

Multiple Choice

What is the approximate maximum amount that a firm should consider paying for a project that will return $15,000 annually for 5 years if the opportunity cost is 10%?

• A) $33,520
• B) $56,860
• C) $62,540
• D)$75,000

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Definitions:

Demand Price

The highest price that consumers are willing to pay for a good or service at a given quantity.

Supply Price

The lowest price at which a seller is willing to sell a good or service, influenced by costs of production and market demand.

Quota Rent

The earnings exceeding normal profits received by license holders when import quotas are in place.

Demand Price

The price of a good or service dictated by the desire and ability of consumers to purchase it at certain price levels.