Use the information below to answer the following questions.
Fact 17.5.1
The Burning Belly Taco Stand is considering buying some new special ovens.Each oven will cost $1,000,and will last for 2 years before it wears out.The ovens will be used to make the Taco Stands famous "Burning Ring of Fire" tacos,and will generate a value of marginal product of $600 for the first oven,$570 for the second oven,and $530 for the third oven.(Assume all revenues are earned at the end of the year. )
-Refer to Fact 17.5.1.If the rate of interest is 5 percent,how many ovens will the Burning Belly Taco Stand buy?

Question

Quizplus · Accepted Answer

The Burning Belly Taco Stand should buy two ovens, as the value of marginal product from the third oven is below the interest rate of 5%. Therefore, the marginal revenue generated from purchasing the third oven is less than the cost of borrowing the money to buy it, making it not a profitable investment. The first two ovens generate enough revenue to cover the cost of purchasing them and earn a profit, making them a worthwhile investment.

Use the Information Below to Answer the Following Questions