Ms. t. potts, the treasurer of ideal china, has a problem. the company has just ordered a new kiln for $560,000. of this sum, $70,000 is described by the supplier as an installation cost. ms. potts does not know whether the internal revenue service (irs) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. in the latter case, the company could depreciate the $70,000 straight-line over 5 years. the tax rate is 30% and the opportunity cost of capital is 5%.a. what is the present value of the cost of the kiln if the installation cost is treated as a separate current expense? b. what is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment? (round your answer to the nearest whole dollar amount.)

1. avoid them

2. a talk with them

3. ask someone you trust

4. ignore

5. call police

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.