Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.
Answer the following statement true (T) or false (F)
True
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The implicit rental rate for capital includes the
A) total value of a piece of capital equipment. B) interest income forgone by purchasing the piece of capital equipment. C) firm's normal profit. D) amount paid for the use of a piece of capital equipment owned by someone else.
You consume only steak and lobster. Your income effect from a drop in the price of lobster is measured by a movement along your indifference curve between steak and lobster
Indicate whether the statement is true or false
Suppose there is an increase in the U.S. interest rate relative to European interest rates. How does this affect U.S. investors?
a. U.S. investors decrease their demand for euros relative to their demand for dollars, shifting D1 to D2.
b. U.S. investors shift their investments to Europe, shifting the demand curve from D1 to D2.
c. U.S. investors shift their investments to Europe, shifting the demand curve from D2 to D1.
d. U.S. investors increase their demand for euros relative to their demand for dollars, shifting D2 to D1.
Under conditions of perfect competition, maximum profit or minimum loss occurs at the point where
a. AR = ATC. b. MR = AR. c. AR = MC. d. AVC = ATC.