Specialization and trade do not allow individuals, firms, or even nations to acquire goods that lie beyond their production capabilities

A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000 . The firm's current fixed costs are $9,000 and current marginal costs are $15 . The firm currently charges $18 per unit. If the interest rate is 5% then the present value of the cash flows is

a. $6,020.41 b. $51,020.41 c. -$7,380.95 d. $10,000

Market failure occurs when

A) a good is too expensive for the market to provide. B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity. C) one good is superior to another and drives it out of the market. D) the stock market experiences a very large loss.