Define the following terms briefly and concisely and indicate their importance to the study of economics
a. entrepreneurship
b. investment
c. capital
d. innovation
e. discounting
a. Entrepreneurship is the act of starting new firms, introducing new products and technological innovations, and taking the risks that are necessary in seeking out business opportunities. It is essential for the success of a market economy.
b. Investment is the flow of resources into the production of new capital goods. The capital stock of the nation cannot grow without net new investment.
c. Capital refers to a stock of plant, equipment, and final goods in business inventory. The factor of production, capital, is essential for production of consumer goods and additional capital goods.
d. Innovation consists of the act of putting the new idea (or invention) into practical use. It is one possible source of economic profit.
e. Discounting is the process of computing the present value of a stream of future monetary payments, given some interest rate. The present value of a payment X at a point n years in the future where the interest rate on funds is r equals: X/(1 + r)n. When the interest rate rises, the present value of the stream of payments decreases.
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An independent variable:
A) cannot be measured. B) cannot be represented on a bar chart. C) is manipulated by the experimenter in an experiment. D) in an experiment is determined by the other variables.
In 1994, the state of California suffered a devastating earthquake. To help pay for the damages, the state raised its sales tax by one cent per dollar of expenditure on most consumer goods
This state sales tax is an example of what economists call: A) an ad valorem tax. B) a specific tax. C) a neutral tax. D) a negative tax. E) none of the above
In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:
a. one minus the variable cost ratio b. contribution margin per unit c. selling price per unit d. standard deviation of unit sales e. none of the above
Assuming MPC is 0.90, what effect, if any, would a change in U.S. net exports of minus $20 billion have on the U.S. level of national income?
a. No effect since the goods would be consumed abroad b. National income increases by $200 billion c. National income decreases by $200 billion d. National income increases by $20 billion e. National income decreases by $20 billion