Contrast the shapes of the supply curves for financial capital and land.
What will be an ideal response?
The usual supply curve for capital shows an upward slope with respect to interest rates. A higher interest rate increases the portion of income saved and available for capital spending. The supply is relatively inelastic with respect to interest rates, partly because some people will actually save less as i increases; such individuals will not need to save as much to meet a future sum when interest rates are high. The supply of land is approximately vertical, since in absolute terms there is a fixed amount of land.
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Indicate whether the statement is true or false
Incentive contracts typically result in higher risk-related compensation to agents on average,
a. even so, they are always worth it b. this does not affect their desirability c. as a consequence, they may cost more than the problem they solve d. therefore, they are never worth it
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a. the marginal revenue product of the resource is equal to the marginal factor cost. b. the marginal factor cost becomes negative. c. the marginal revenue product of the resource is greater than the marginal factor cost. d. the marginal revenue product falls to zero. e. the marginal revenue product of the resource is less than the marginal factor cost.
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a. True b. False Indicate whether the statement is true or false