Existing firms in the rental car industry will stay in the industry but will not want to undertake any investment projects other than to replace depreciating capital stock if the normal rate of return in the industry is ________ and the return that firms earn in this industry equals exactly ________.
A. 6%; 6%
B. 4%; 7%
C. 1%; 2%
D. 12%; 9%
Answer: A
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Refer to Figure 5-7. Which of the following statements is true?
A) The optimal quantity of pollution reduction is QB. B) The optimal quantity of pollution reduction is QE. C) At QE the benefits of reducing pollution outweigh the cost of pollution reduction. D) At QB society is under allocating resources to pollution reduction.
Demand is inelastic only if
a. price elasticity has an absolute value of 1 b. price elasticity has an absolute value greater than 1 c. price elasticity has an absolute value less than 1 d. price elasticity is negative e. consumers do not respond to a change in price
If Congress suddenly passes legislation that required all U.S. workers to receive the same annual pay, we would expect
a. less human capital investment. b. a shortage of workers to fill the least desirable jobs. c. a surplus of workers to fill the easy, desirable jobs. d. all of the above.
Refer to the graphs shown. Deadweight loss is the least with the imposition of a given per-unit tax on producers in graphs:
A. C and D. B. B and C. C. B and D. D. A and D.