ABC Engineering Just Bought a New Machine

question 92

Multiple Choice

ABC Engineering just bought a new machine. All of the following are examples of incremental cash flows EXCEPT

• A) interest expense on the loan used to purchase the machine.
• B) installation costs on the new machine.
• C) increase in costs as a result of the new machine.
• D) increases in depreciation expenses as a result of the new machine.

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Definitions:

Elastic

Describes a situation in which the demand or supply for a good or service changes significantly when its price changes.

Inelastic

A situation in which the demand or supply for a product does not change significantly in response to price changes.

Fixed Productive Capacity

The maximum output that an economy can produce without increasing inflation, assuming resources are fully utilized.

Chocolate

A sweet, typically brown food preparation of roasted and ground cacao seeds.