Noel stewart bought a machine two years ago for $500. he must now replace the old machine by buying a new model 206 for $700 or a used model 204 for $650. noel has decided to buy model 204.in making his decision, noel should consider the differential cost to be: a) $50.b) $200.c) $150.d) $500.

A) $50

Explanation:

Differential cost: It is that cost which shows a difference between two alternatives choices. The benefit which comes after the exchange of alternatives would be termed as differential cost.

In mathematically,

Differential cost = Buying model - usage model

= $700 - $650

= $50

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