Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000 . He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Abdul's annual explicit cost of capital is
a. $8,000.
b. $4,000.
c. $2,000.
d. $1,000.
a
You might also like to view...
In a market system, the major coordination tasks are carried out
A. with the approval of central planners. B. as part of the regular appropriation process of Congress. C. irregularly by the major corporations. D. automatically by the market mechanism.
When World War II (1941–45) came,
(a) the labor force expanded by very little despite the high unemployment of 1941. (b) unemployment was still high enough that the armed forces could be expanded and war production expanded without a large increase in the labor force. (c) a large increase in the labor force occurred in all categories, including men over 65 and women. (d) none of the above occurred.
The European Union antitrust law focuses on which of the following?
A) furthering the social interest B) consumer welfare C) the means to monopolize a market D) ethics
For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140 . Marginal revenue at that output level is
a. equal to $140 b. greater than $140 c. less than $140 d. less than marginal cost e. greater than average revenue