Economists also refer to the normal rate of return on investment as
A) a residual cost.
B) the opportunity cost of capital.
C) the equity kicker.
D) the fixed cost of entrepreneurship.
Answer: B
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The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of
A) a decrease in the quantity demanded of cereal because of the substitution effect. B) an increase in the quantity demanded of eggs because of the income effect. C) a decrease in the quantity supplied of cereal because of the substitution effect. D) an increase in the quantity supplied of eggs because of the income effect.
The closest thing in the real world to a negative income tax is the _____
a. AARP b. EITC c. TANF d. AFDC
The above figure shows the demand and marginal cost curves for a monopoly. Under monopoly, consumer surplus equals
A) a + b. B) a + b + c. C) a + b + c + d + e + f. D) None of the above.
In 2010, the co-chairmen of President Obama's deficit reduction commission proposed curtailing or eliminating many tax deductions such as the one for mortgage interest. Economists who favor the proposal argue that it would (i) correct a misallocation of resources because too much of the economy's capital stock is tied up in residential housing and too little is invested in corporate capital. (ii)
cut both spending and taxes. (iii) encourage private philanthropy. a. (i) only b. (ii) only c. (i) and (ii) only d. (i), (ii), and (iii)