The marginal product of new capital depends on ________ and ________.
A. productivity of capital; relative price of the firm's output
B. relative price of the firm's output; real interest rate
C. productivity of new capital; real interest rate
D. price of new capital goods; real interest rate
Answer: A
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Asset specificity is largest when
a. value in first best use is large b. value in second best use is large c. customers choose their supplier at random d. very valuable assets are non-redeployable e. customers are loyal to a particular seller
After watching a movie, Alan chooses not to watch a second and goes for a walk instead. Economists could explain his choices using the concept of:
A. budget constraints. B. diminishing marginal utility. C. income effect. D. substitution effect.
Assuming prices and wages are fully flexible, the aggregate supply curve will be:
a. upward sloping, but not vertical. b. vertical. c. horizontal. d. downward sloping.
The opportunity cost of an action: a. can be objectively determined only by economists
b. is a subjective valuation that can only be determined by the individual who chooses the action. c. can be determined by adding up the dollar costs incurred as a result of the action. d. can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.