Assume there are no prospective investment projects (I) that will yield an expected rate of return (r) of 25 percent or more, but there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent, an additional $5
billion between 15 and 20 percent, and so on. If the real interest rate is 15 percent in this economy, the aggregate amount of investment will be:
A. $25.
B. $20.
C. $15.
D. $10.
D. $10.
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Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below.Process(smoke/day) A(10 tons/day) B(8 tons/day) C(6 tons/day) D(4 ton/day) E(2 tons/day) Cost to Acme ($/day) $750$800$1,000$1,400$2,000 Cost to FirmCo ($/day) $500$750$1,200$2,200 $4,000Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20%, then the firms will adopt process ________, and a total of ________ tons of smoke will be emitted each day.
A. B; 16 B. A; 18 C. C; 12 D. D; 8
Suppose that the total production of an economy consists of 4 oranges and 10 candy bars, each orange sells for $0.25, and each candy bar sells for $0.50. What is the market value of production in this economy?
A. $6.00 B. $5.00 C. $0.75 D. $1.00
Refer to the table above. If the firm decides to choose factory Far over Close, what is its marginal opportunity cost of transporting products to the market?
A) $150 B) -$200 C) $50 D) $100
If the economy is growing 5% a year and GDP is $1000 billion, the additional revenues available to meet interest payments on the government deficit would be, ceteris paribus,
A) 50. B) 500. C) It depends upon the amount of new debt issued. D) There would be no additional revenues.