In the year that a bakery buys a new $100,000 oven by borrowing at a real interest rate of 5 percent, the oven adds $22,000 to bread sales, depreciates by $8000, and requires $3000 in natural gas and maintenance
Since the MPK is ________ the user cost of capital, the bakery should ________. A) above, shut down the oven
B) above, consider buying more ovens
C) below, shut down the oven
D) below, consider buying more ovens
B
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Federal Express's purchase of trucks and planes
A) is financial capital. B) creates wealth. C) is an example of physical capital. D) reflects capital gains. E) includes depreciation.
It is inflationary for government to increase spending if:
a. it also cuts taxes. b. the aggregate supply curve is flat. c. the economy is at full employment. d. equilibrium real GDP is well below full employment.
The Phillips curve is built on the assumption that business fluctuations are
a. from the demand side. b. from the supply side. c. from both the demand and supply side. d. purely random events.
A subsidy is the same thing as a tax deduction
Indicate whether the statement is true or false