The functioning of a market economy is very dependent upon investment for provision of capital and future growth. Describe the process of investment and employment of the created capital in production.
What will be an ideal response?
The text lists five steps: (1) decision of the firm to enlarge the capital stock; (2) acquisition of funds from outside sources or retained earnings; (3) use of funds to hire inputs to build factories, etc. (investment); (4) addition to capital stock from the investment process; and (5) employment of the capital in production to expand output or reduce costs, which produces returns on the investment.
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The slope of the credit demand curve from the text book implies that the:
A) higher the rate of taxation, the lower the quantity of credit demanded. B) higher the real rate of interest, the higher the quantity of credit demanded. C) higher the real rate of interest, the lower the quantity of credit demanded. D) higher the rate of taxation, the higher the quantity of credit demanded.
Using a graph, illustrate the effect that an increase in production costs will have on the equilibrium price and quantity of a good
What will be an ideal response?
In the long run, a perfectly competitive firm maximizes profit so P = MC = AC.
Answer the following statement true (T) or false (F)
________ can change a resource's marginal product
a. A change in demand for the final product b. A change in the supply of the final product c. A change in the technology used in production d. A change in the price of the final product