Suppose a firm is considering to buy a machine today at $25,000. The use of this machine in the production process of a commodity causes firm`s net incomes to rise by $ 15,000 in each of the next two years. Assume the rate of interest is 10% and machine has no scrap value. Is it desirable for the firm to purchase the machine? Explain your answer.

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Q: Question 21.21. Which would be an implicit cost for a firm?  The cost         of worker wages and…

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