consultant tells the factory supervisor that the lighting bill can be reduced to $8,000 a year if $50,000 is invested in new lighting in the building. If the new lighting system is installed, an incremental maintenance cost of $3,000 per year must be taken into account. The new lighting system has zero salvage value at the end of its life. If the old lighting system also has zero salvage value, and the new lighting system is estimated to have a life of 20 years, what is the net annual benefit for this investment in new lighting

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale