Asset Replacement Decisions Involve

question 25

Multiple Choice

Asset replacement decisions involve:

• A) choices between continuing using existing materials or replacing them with less expensive materials.
• B) choices between closing down or continuing to operate a segment of a business.
• C) choices between continuing operating existing equipment or replacing it with new equipment.
• D) None of these.

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Definitions:

Labor-Saving

Technologies or methods that decrease the amount of labor required to produce goods or services, thereby increasing productivity.

Output Per Worker

The quantity of goods and services produced per unit of labor.

Profit-Maximizing

The process by which a company determines the price and output level that returns the greatest profit.

Competitive Firm

A firm that operates in an environment where no single firm can influence the market price of its product.