How would the desired capital stock be affected by a decline in the user cost of capital?
What will be an ideal response?
A firm sets its capital stock such that the future marginal product of capital equals the user cost, where the future marginal product of capital declines as the amount of capital increases. A decline in the user cost requires that the future marginal product of capital also decline to maintain the equality. So the desired capital stock increases.
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J-curve effects following a devaluation are simply a theoretical issue with no real world importance
Indicate whether the statement is true or false
So long as a firm is enjoying increasing marginal returns, a one unit increase in output will cause marginal costs to ________ and total costs to ________
A) increase; increase B) decrease; increase C) increase; decrease D) decrease; decrease
Fast Technology sells its computers and monitors separately, but also sells them as a package. This is an example of ________.
A) mixed bundling B) two-part pricing C) an all-or-nothing offer D) pure bundling
Expansionary fiscal policy
What will be an ideal response?