Your aunt owns a gold mine. The marginal extraction cost of gold is $25 and remains constant over time. The current market price of a unit of gold is $200. Your aunt's appropriate discount rate is 12%
Next year, your aunt expects the price of a unit of gold to be $222. Should your aunt extract any gold from the mine this year?
No, she should not extract and sell any gold currently. This is because the return on the gold left in the mine exceeds her discount rate. That is,
(Pt+1 - c) > (1 + r)( Pt - c) → (222 - 25 ) > (1.12 )(200 - 25 ).
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In the above figure, if the real interest rate is 8, there is
A) underproduction in this economy. B) a surplus of loanable funds. C) a shortage of loanable funds. D) a shortage in available funds for investment.
All of the following are considered a barrier to entry into a market EXCEPT
A. ownership of resources without close substitutes. B. economies of scale. C. when firms can only earn a normal rate of return in a market. D. governmental restrictions on a firm's ability enter a market.
The annual statement of the outlays, tax revenues, and surplus or deficit of the government of the United States is the federal
A) budget. B) deficit record. C) debt to the public. D) spending. E) surplus record.
According to the classical economists, unemployment was a temporary deviation from equilibrium, and certain forces in the economy would return it to full employment. Such forces did not include
a. price competition. b. wage competition. c. a variable rate of interest. d. discretionary government spending.