The opportunity cost of capital is
A) an explicit cost.
B) a part of economic profits.
C) usually unknown and must be estimated by looking at the price of capital goods.
D) the normal rate of return.
Answer: D
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The Federal Reserve System was established
a. at the request of farmers to keep down interest rates. b. because Americans believe in centralization of authority. c. after four severe bank panics between 1873 and 1907. d. as part of the Treasury Department.
When prices at Wendy's rise, more consumers buy their meals at McDonald's and fewer consumers buy their meals at Wendy's. This is an example of
A) commodity substitution. B) outlet substitution. C) consumers' action to boycott Wendy's. D) both A and B. E) both B and C.
The demand to attend a certain college is represented by a downward-sloping demand curve. The supply of spots at the college is represented by a vertical supply curve. At the tuition that students are charged, there is a shortage of spots at the college. If the demand to attend the college rises, but the tuition stays constant, it follows that the
A) GPA required to attend the college will probably rise. B) GPA required to attend the college will probably fall. C) SAT score required to attend the college will probably not change. D) a and c E) There is not enough information to answer this question.
A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 33 percent chance the recession will end in six months and profits will return to $100 million. However, there is a 67 percent chance the recession will not end in six months, resulting in a $7 million loss. The standard deviation of profits over the next six months is:
A. $0 million. B. $57.40 million. C. $28.31 million. D. $50.31 million.