Suppose that a firm can invest $100 today in a project and receive $105 a year from today. There is no inflation, and the annual interest rate in the economy is 4%. The firm should
A) invest in the project because the opportunity cost is the same as the return on the investment.
B) invest in the project because the opportunity cost is greater than the return on the investment.
C) invest in the project because the opportunity cost is less than the return on the investment.
D) not invest in the project because the opportunity cost is less than the return on the investment.
C
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As the confectionary, Mrs. Fields' Cookies, gained popularity in California and decided to expand its operations to Utah, it was able to achieve economies of scale. This means that:
a. property taxes were lower in its new location in Utah. b. transport and communication systems were more developed in Utah. c. wages were higher in Utah compared to California. d. expansion of output and firm size led to specialization among the workers. e. government policies were more favorable in Utah.
Which one of the following statement best describes a price floor?
a. A price floor causes demand to change. b. A price floor causes supply to change. c. A price floor keeps a price from rising above a certain level. d. A price floor keeps a price from falling below a certain level.
If the marginal propensity to save in a country is 0.4, then the value of the tax multiplier is: a. ?1
b. ?0.5. c. ?2. d. ?1.5.
If an increase in the price of good X results in a decrease in the quantity of Y demanded,
A. good X and good Y are substitutes. B. good X and good Y are complements. C. the cross-price elasticity of demand for good Y is positive. D. There is not sufficient information to determine the relationship between good X and good Y.