If a machine cost $50,000 initially and is expected to last for 20 years but is worth $60,000 after one year because it is in short supply, an economist most likely would say that:
A) the machine's cost for each of its 20 years of existence is $2,500.
B) the machine's cost for each of its 20 years of existence is $3,000.
C) during the first year the machine had no cost; it provides an implicit revenue of $10,000 to the firm.
D) the value of the machine will continue to increase 20 percent per year for the next 20 years.

Question

Quizplus · Accepted Answer

The machine's value increased by $10,000 in the first year, which can be considered an implicit revenue rather than a cost.

If a Machine Cost $50,000 Initially and Is Expected to Last