The maintenance cost of a production machine is $200 in the first year, which will increase by $200 each year thereafter (i. e., $400 in the 2nd year, $600 in the 3rd year, $800 in the 4th year, and so on). The machine is used for 10 years. The equivalent uniform annual cost for the maintenance of the machine at an interest rate of 5% is closest to:

B. $820

Explanation:

Options are "A. $935 B. $820 C. $420 D. $1,020 E. $949.56"

Present worth = [$200(P/A, 5%,9) + $200(P/G, 5%,9)(P/F, 5%,1)]

Present worth = $200*(7.108) + $200(26.127)(0.9524)]

Present worth = $200(33.235) * (0.9524)

Present worth = $6,647 * 0.9524

Present worth = $6330.6028

Present worth = $6,330.60

Equivalent uniform annual cost = Present worth (A/P, 5%,10)

Equivalent uniform annual cost = $6,330.60 (0.1295)

Equivalent uniform annual cost = $819.8130626

Equivalent uniform annual cost = $820

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.