Mark Is an Engineer Who Has Designed a Telecommunications Device

question 152

Multiple Choice

Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device.
-Mark purchased a machine two years ago to make experimental boards.The machine will be used to manufacture the new board.The cost of this machine is:

• A) an opportunity cost
• B) a sunk cost
• C) a differential cost
• D) a period cost

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Definitions:

Public Borrowing

The process by which a government finances its expenditure by raising loans through the issuance of securities or borrowing from financial institutions.

Federal Deficit

The fiscal year difference when the U.S. Government's expenditures exceed its revenues, necessitating borrowing to cover the gap.

Real GDP

The measure of a country's economic output adjusted for inflation, reflecting the true value of goods and services produced.

Loanable Funds

A concept in economics that describes the market where borrowers obtain funds from savers, influenced by interest rates.