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
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 term ceteris paribus means
A) the greatest good for all. B) the study of scarcity and choice. C) all other things remaining constant or equal. D) value-free and testable.
Referring to a production possibilities curve and the goods being compared, depict the economic event. Widespread use of the assembly line revolutionizes U.S. industry in the early 20th century (capital vs. consumer goods).
A. A movement from a point inside the curve to a point on the curve B. A movement from a point on the curve to a point inside the curve C. A shift in the entire curve to the right (outward) D. A shift in the entire curve to the left (inward)
The graph above shows cost curves for a perfectly competitive firm. If market price is $5, how much profit will the firm earn?
A. $900 B. $600 C. ?$600 D. $3000
Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 6 ? Q. If each firm's cost function is Ci(Qi) = 6 + 2Qi, then each firm will symmetrically produce ________ units of output and earn ________.
A. 2 units; losses of $6 B. 4 units; losses of $2 C. 4 units; profits of $6 D. 2 units; profits of $2