Calculate the user cost of capital of a machine that costs $5000 and depreciates at a 25% rate, when the nominal interest rate is 5% and the expected inflation rate is 10%.
A. $100
B. $1000
C. $5000
D. $1500
Answer: B
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Warranties in the used car market ________ the problem of private information thereby causing the price of good and bad used cars to ________
A) reduce; be the same B) reduce; differ C) magnify; be the same D) magnify; differ
What are the two principles of fairness that are applied to tax systems?
What will be an ideal response?
All of the following government actions create barriers to entry EXCEPT
A) limiting the number of airlines that may operate at an airport. B) granting a patent to a drug company. C) requiring a pizza parlor to get a business license. D) giving a power company exclusive use of the city's transmission lines.
Which of the following is NOT a true statement regarding free trade?
A) Free trade promotes specialization and efficient production. B) Free trade generally reduces the domestic prices of imports. C) Free trade may stimulate economic growth through export sales. D) Every individual in a country gains short-term benefits from free trade.