Toni's Tools Is Comparing Machines to Determine Which One to Purchase.The

question 12

Multiple Choice

Toni's Tools is comparing machines to determine which one to purchase.The machines sell for differing prices,have differing operating costs,differing machine lives,and will be replaced when worn out.These machines should be compared using:

• A)net present value only.
• B)both net present value and the internal rate of return.
• C)the replacement parts approach.
• D)the depreciation tax shield approach.
• E)their equivalent annual costs.

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Definitions:

Production Isoquant

A curve that represents all combinations of inputs that produce the same level of output, used in the analysis of production technology.

Marginal Products

The additional output that is produced by using one more unit of a particular input, holding other inputs constant, critical in the analysis of production efficiency.

Profitability

A measure of the efficiency with which a company or a business utilizes its resources to generate profits.

Production Set

A set of all possible combinations of inputs and outputs that a firm can produce taking into account its technology.