Interest is considered a(n)
A) explicit cost when the firm pays a bank to borrow money.
B) implicit cost when the firm owner uses his or her own funds to buy capital.
C) return to entrepreneurship if the firm owner uses her own funds to buy capital.
D) form of depreciation if the cost of borrowing increases.
E) Both answers A and B are true.
E
You might also like to view...
Krystal runs a nail salon and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that Krystal's marginal benefit of staying open per hour is $18
If she is following the marginal principle, how many hours should Krystal stay open? A) 3 hours B) 4 hours C) 6 hours D) 7 hours
Which of the following generate an income that would be excluded from the GDP of an economy?
a. A professional working in small start-up firm b. A person selling heroin to tourists c. A person selling electronic guides to tourists d. A farmer selling oranges to a fruit seller
If a production function has constant returns to scale, output can be doubled if
a. labor alone doubles. b. all inputs but labor double. c. all of the inputs double. d. None of the above is correct.
If the marginal propensity to consume (MPC) is 0.75, a $50 decrease in government spending, other things being equal, would cause equilibrium real GDP to:
A. increase by $50. B. decrease by $50. C. increase by $200. D. decrease by $200.