The user cost of capital is given by the following formula, where pK is the real price of capital goods, d is the depreciation rate, and r is the expected real interest rate.
A. uc = d pK/r
B. uc = pK/(r + d)
C. uc = (r + d)pK
D. uc = (r + d)/pK
Answer: C
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"Economic exploitation" is measured by:
a. the sum of all input costs, both direct and indirect. b. the difference between the value of output a worker adds and what she receives. c. the difference between a monopoly's profit and the profit of a competitive firm. d. the average wage of a skilled worker divided by the average wage of an unskilled worker.
Normative statements are
a. not usually made by economists. b. claims about how the world should be. c. claims about how variables in the economy normally behave. d. pessimistic interpretations of the economy.
Which of the following examples shows product differentiation?
a. When Carrie buys bananas, she doesn’t care what company produced them. b. An automotive oil provides that same benefits for a car as other brands. c. A grocery clerk says his store’s produce is at least as good a nearby supermarket. d. An ad emphasizes how a laundry detergent cuts grease better than other brands.
Long-run competitive equilibrium:
A. is realized only in constant-cost industries. B. will never change once it is realized. C. is not economically efficient. D. results in zero economic profits.