Here is My new Puppy!!!!
2 answers:
You might be interested in
Answer:
1. False
2. Shortage; Larger
Explanation:
1. A binding price ceiling is one that prevents the market from reaching its equilibrium. In this market, the equilibrium price is $25 therefore anything below $25 will be binding. A price ceiling below $25 per box is a binding ceiling.
2<em>. Assuming that the long-run demand for oranges is the same as the short-run demand, you would expect a binding price ceiling to result in a </em><em><u>shortage</u></em><em> that is </em><em><u>larger</u></em><em> in the long run than in the short run.</em>
In the long run, supply is more sensitive because farmers can decide to plant oranges on their land, to plant something else, or to sell their land altogether.
This means that a price ceiling in the long run will be less attractive to farmers so they might leave the market. If they do this then the shortage will be more as there are now less supplies in the market.
Answer:
Machine B EAC is $17,705.78 more than Machine A EAC.
Explanation:
First find the present values of the cost of both machines.
Machine A:
= 200,000 + (15,000 * Present value of annuity interest factor, 15%, 8 years)
= 200,000 + ( 15,000 * 4.4873)
= $267,309.50
Machine B
= 300,000 + (17,500 * Present value of annuity interest factor, 15%, 10 years)
= 300,000 + 17,500 * 5.0188
= $387,829
Equivalent Annual cost Machine A:
= [(NPV * Required return) / 1 - (1 + Required return) ^–Number of Periods
=[(267,309.50 * 15%) / 1 - 1.15⁻⁸
= $59,569.95
Equivalent Annual cost Machine B:
= (387,829 * 15%) / (1 - 1.15⁻¹⁰)
= $77,275.73
Difference:
= 77,275.73 - 59,569.95
= $17,705.78
