The normal rate of return on capital is also known as the
A) fixed cost of capital.
B) depreciation cost of capital.
C) opportunity cost of capital.
D) monopoly rent.
Answer: C
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For the simple case of a production function with two inputs in which the inputs are perfect complements, each isoquant is represented by:
A) a vertical line. B) a horizontal line C) a downward sloping straight line. D) a line that forms a right angle.
Following their profit maximizing motivation, firms will differentiate their products in a way that maximizes welfare
Indicate whether the statement is true or false
One part of the supply-side argument is that
A) lower marginal tax rates are required to induce Congress to reduce government spending. B) lower marginal tax rates can increase total tax revenues. C) the marginal tax rate should be set at 50 percent. D) the relevant aggregate supply curve is close to horizontal.
Suppose that the current price of a marketable permit to emit one ton of gunk is $60 . For firm A, the marginal cost of reducing one ton of gunk is $50 . For firm B, the marginal cost of reducing one ton of gunk is $70 . Under a marketable permit system, _____
a. both firms will buy a permit and emit one more ton of gunk b. firm A will buy a permit and emit one more ton of gunk, whereas firm B will reduce its emissions of gunk by one ton c. firm B will buy a permit and emit one more ton of gunk, whereas firm A will reduce its emissions of gunk by one ton d. both firms will reduce their emissions of gunk by one ton e. both firms will go out of business