Which of the Following Is Irrelevant When Deciding to Upgrade

question 113

Multiple Choice

Which of the following is irrelevant when deciding to upgrade a company's heating and air conditioning system?

• A) the energy efficiency of the old equipment versus the energy efficiency of the new equipment
• B) the safety of the new equipment compared to the old equipment
• C) the purchase price of the old equipment compared to the purchase price of the new equipment
• D) the productivity of the old equipment compared to that of the new equipment

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Definitions:

Economic Profit

Profits calculated after considering both explicit costs, like materials and labor, and implicit costs, like opportunity costs, differentiating it from accounting profits.

Pure Rate of Interest

The theoretical return on an investment with no risk of financial loss, representing the time value of money.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on investments.

Capitalist Income

The total earnings received by capital owners in an economy, including profits, rents, interest, and dividends.