Describe the interest-rate cost-of-funds curve as it relates to R&D expenditures and as presented in this chapter
What will be an ideal response?
The curve is a horizontal line at a particular interest rate that a firm must pay for the funds. The firm can borrow any amount of funds at the particular interest rate. This interest rate is the marginal cost to the firm of the borrowed funds.
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An upward-sloping supply curve shows that
A. buyers are willing to pay more for a scarce product. B. suppliers are willing to increase production of their goods if they can receive higher prices for them. C. buyers are unaffected by sellers’ costs of production. D. the price of a product is not influenced by the price buyers are willing to pay. E. at higher prices, an envy effect begins to affect the demand curve.
Short-run average cost exceeds long-run average cost only when there are economies of scale
Indicate whether the statement is true or false
In the aggregate demand/aggregate supply model, when the output of an economy is less than its long-run potential, the economy will experience
a. declining real wages and interest rates that will stimulate employment and real output. b. rising interest rates that will stimulate aggregate demand and restore full employment. c. a budget surplus that will stimulate demand and, thereby, help restore full employment. d. rising real wages and real interest rates that will restore equilibrium at a higher price level.
If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to:
A. 0.333. B. 0.30. C. 30. D. 3.