Using a discount rate above the market interest rate to evaluate projects will
a. bias a decision toward going ahead with the project
b. correct for distortions in capital markets
c. have no impact on project evaluation
d. bias a decision toward rejecting a project
e. none of the above
D
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If the marginal rent cost of moving from Apartment 1 to Apartment 2 is -$60, and marginal commuting cost of moving from Apartment 1 to Apartment 2 is $40:
A) moving from Apartment 1 to 2 will save the renter $60 more in rent and $40 more in commuting. B) moving from Apartment 1 to 2 will cost the renter $60 more in rent but save $40 in commuting. C) moving from Apartment 1 to 2 will cost the renter $60 more in rent and $40 more in commuting. D) moving from Apartment 1 to 2 will save the renter $60 in rent but cost $40 more in commuting. Assume that a firm wants to set up a factory. It has four different options. The rent of the factory in the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. Factory Location Monthly Commuting Time (hours) Monthly Rent ($) Very Far 30 2,060 Far 25 2,100 Close 15 2,300 Very Close 5 2,500
The production possibilities curve bows out because
A) production is efficient. B) of the law of increasing additional cost. C) production is inefficient. D) resources are not being fully utilized.
Product differentiation in a monopolistically competitive market always entails more costs than benefits.
Indicate whether the statement is true or false.
Goods and services purchased from international sources are
A. Net imports. B. Net exports. C. Exports. D. Imports.