Calculate the user cost of capital of a machine that costs $100,000 and depreciates at a rate of 25%, when the nominal interest rate is 4% and the expected inflation rate is 1%.
A. $29,000
B. $28,000
C. $25,000
D. $3000
Answer: B
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We expect the marginal utility curve to be downward sloping
Indicate whether the statement is true or false
Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to
a. shift the supply curve up by exactly $4 and the price paid by buyers will remain unchanged. b. shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4. c. shift the supply curve up by exactly $4 and the price received by sellers will rise by exactly $4. d. shift the demand curve down by exactly $4 and the price paid by buyers will fall by exactly $4.
One policy the government can use to remedy the effects of pollution caused by the production of a good is to
a. lower the price of the good b. create positive externalities to compensate for the negative ones c. levy a tax on each unit of the good produced d. create free riders e. increase the production of the polluting good
In the prisoner's dilemma game:
A. both players have a dominant strategy. B. neither player has a dominant strategy. C. only one player will ever have a dominant strategy. D. All of these may be true in a prisoner's dilemma game.