A firm will only invest when the marginal revenue product of capital is less than its rental cost.
Answer the following statement true (T) or false (F)
False
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Suppose the nominal interest rate is 4% and the rate of inflation is 3%. The real interest rate is therefore
A) 7%. B) 1%. C) 0%. D) -1%. E) none of the above.
A person who is risk averse might accept a 50% chance of losing $100 today in exchange for a 50% chance of winning $125 in two years if the interest rate was
a. 9% but not 10% b. 10% but not 11% c. 11% but not 12% d. None of the above is correct; a risk averse person would not accept any of the above bets.
Suppose the inverse market demand is given by P = 150 ? 2Q. If the incumbent continues to produce 10 units of output, which of the following equations best summarizes the potential entrant's residual demand curve?
A. P = 75 ? 0.5Q B. P = 130 ? 2Q C. P = 150 ? 4Q D. P = 130 ? Q
Computerization of the business world since the 1980s and the development of the Internet in the 1990s
A. created more perfectly competitive firms. B. brought businesses closer to a state of perfect knowledge. C. created perfect mobility among resources thus making all businesses closer to the state of perfect competition. D. has made products more identical.