Your firm needs a computerized machine tool lathe which costs $51,000 and requires $12,100 in maintenance for each year of its 3
-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 34 percent and a discount rate of 11 percent. If the lathe can be sold for $5,100 at the end of year 3, what is the after-tax salvage value
This situation means that resources were not being efficiently used.
If society managed to produce 1 more unit of X with the same resources and technology, this means that some resources were idle in the past, which causes inefficiency.
This also means that the combination 3 units of X and 4 units of Y is a point inside the PPF. However, we do not know if the combination 4 units of X and 4 units of Y is a point inside the PPF, or on the PPF, because there could be some other combination that could be even more efficient (for example 5 units of both X and Y with the same resources and technology).
