The idea that money has "time value" refers to the fact that:
A. people prefer to receive a given sum of money in the future rather than in the present.
B. money can be used to purchase the services of labor, as measured in hourly units.
C. a specific amount of money is more valuable to a person the sooner it is received.
D. compound interest converts future dollars into a greater amount of current dollars.
C. a specific amount of money is more valuable to a person the sooner it is received.
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If a firm finds that the wage rate (W) is less than the value of marginal product (VMP), then to maximize its profit the firm should hire
A) less labor, which will increase the VMP. B) more labor, which will decrease the VMP. C) no more or less labor, because profits are greatest when W < VMP. D) more labor, because hiring more labor will increase both W and VMP until they are equal.
Explain why imperfect information can lead to market failure. Explain how the market can solve the problem of imperfect information
Under what circumstances may it be more efficient for the government to produce information instead of relying on the market?
An efficient economy would set the marginal product in the traditional sector
A) lower than that in the modern non-traditional sector. B) higher than that in the modern sophisticated sector. C) equal to that in the modern sophisticated sector. D) lower in the relatively capital intensive sector. E) higher in the relatively capital intensive sector.
At the socially optimal equilibrium, _____
a. social cost exceeds private cost b. a market is allocatively efficient c. the marginal private cost of a given level of output is equal to the marginal social benefit d. the marginal private cost of a given level of output is greater than the marginal social benefit