Which of the following is NOT a correct description of opportunity cost of capital?
A. It is the normal rate of return on investment.
B. It is an implicit cost.
C. It is the income sacrificed by not investing in another firm.
D. It is normally included in accounting costs.
Answer: D
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You do some research and find for a driver of your age and gender the probability of having an accident that results in damage to your automobile exceeding $100 is 1/10 per year. Your auto insurance company will reduce your annual premium by $40 if you will increase your collision deductible from $100 to $250. Should you? Explain.
What will be an ideal response?
A. decrease the quantity of X demanded by more than 4 percent. B. decrease the quantity of X demanded by less than 4 percent. C. increase the quantity of X demanded by more than 4 percent. D. increase the quantity of X demanded by less than 4
percent. A. the price elasticity of demand is 0.44. B. A is a complementary good. C. the price elasticity of demand is 2.25. D. A is an inferior good.
Playing the game in Scenario 13.12 by using a maximin strategy would
A) not change the equilibrium from the equilibrium of the original game. B) change the equilibrium to (R1,C2 ). C) change the equilibrium to (R2,C1 ) if R moved first. D) change the equilibrium to (R2,C1 ) if C moved first. E) change the equilibrium to (R2,C2 ).
Suppose we observe the following two simultaneous events in the market for beef. First, there is a decrease in the demand for beef due to changes in consumer tastes. And second, there is a reduction in beef cattle supply due to climate change. We know with certainty that these two simultaneous events will cause which of the following?
A. a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price B. a decrease in the equilibrium quantity and an increase in the equilibrium price C. an increase in the equilibrium quantity and in the equilibrium price D. no change in the equilibrium quantity and a reduction in the equilibrium price