Questions
1.What is the difference between the isoquant and the production possibilities curve?
2. You are considering purchasing a new piece of machinery that costs $200,000. Due to increased efficiency as a result of this investment your profit increases by $30,000 per year. If you sell the machinery at the end of ten years for its salvage value of $20,000 what is the net present value of this investment assuming a discount rate of 6%?