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1. Account for what motivates rental firm’s investment decisions?
2. With the use of the neoclassical model of investment, elaborate on what would happen to the rental price of capital, the cost of capital, and investment if a hurricane destroys some portion of the capital stock.
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- How is optimal investment for the firm affected by an increase in the current capital stock? A. The demand for investment goods will increase along the optimal investment schedule. B. The optimal investment schedule shifts to the right. For each level of investment, the future marginal product of capital will increase. C. The demand for investment goods will decrease along the optimal investment schedule. D. The optimal investment schedule shifts to the left. For each level of investment, the future marginal product of capital will decrease.Which of the following is equal to the derivative (or partial derivative) of some function in economics with respect to a certain variable? Select one: a. I don't know b. Marginal rate of technical substitution c. None of the others d. Marginal propensity to consume multiplier e. Marginal product of labour 1. Cross price elasticity of demandInterest Rate 0 Multiple Choice O O A O S₁ BC Quantity Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is S₁. If the supply of loanable funds increases to So, the equilibrium quantity of funds borrowed will increase from E to F. increase from A to B. increase from B to C. So decrease from G to F. Do D₁
- 17) Assume that a national restaurant firm called BBQ builds 10 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $200,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues and sells 200,000 shares of stock at $30 per share. Instructions: Enter your answers as whole numbers. a. What is the amount of economic investment that has resulted from BBQ’s actions? b. How much purely financial investment took place?With the use of an example, briefly explain the main difference between the ex-ante and the ex-post opportunity cost of capital. Why does this matter for the evaluation of an investment decision? In what ways can managers utilise the distinction between ex-ante and ex-post opportunity cost of capital when deciding on the firm’s strategy?6. In the neoclassical economy, each firm produces one thing and procures all inputs from efficient markets. Why do firms produce many inputs "in house" in the real world?
- 1. What are the ultimate reasons for analyzing the economic performance of a country/ market? How does the economic performance affect the components of the investment cash flows? 2. How the movements of house prices can be explained by the economic theory (law of demand and supply)?There is a negative relationship between planned investment and the interest rate because... Select one: O a. none of the options O b. the interest rate affects the cost of investment projects O c. the risk affects the return on investment projects O d. the interest rate affects the income tax of investment projectsExplain the difference between the stock variable and a flow variable in economics with one example of each.
- 1. According to part A of Table 5-1, what education level loses most (i.e., has the greatest decrease in wage) from immigration to the United States? Does this result depend on keeping the rental on capital constant? Explain why or why not. 2. Suppose that computers use 2 units of capital for each worker, so that KC = 2 • LC, whereas shoes use 0.5 unit of capital for each worker, so that KS = 0.5 • LS. There are 100 workers and 100 units of capital in the economy. a. Solve for the amount of labor and capital used in each industry. Hint: The box diagram shown in Figure 5-7 means that the amount of labor and capital used in each industry must add up to the total for the economy, so that Use these two equations to solve for LC and LS, and then calculate the amount of capital used in each industry using KC = 2 • LC and KS = 0.5 • LS. b. Suppose that the number of workers increases to 125 due to immigration, keeping total capital fixed at 100. Again, solve…Economics 1) Draw a saving-investment diagram to show how each of the following changes shifts the IS curve. (a) Future income rises. (b) The future marginal productivity of capital increases. (c) Government purchases decrease temporarily. (d) The effective corporate tax rate increases.QUESTION 27 Mazen is refinishing an antique china cabinet and has already spent AED 180 on the restoration. He expects to be able to sell the cabinet for AED 360. Mazen discovers that he needs to do an additional AED 200 of work to make the cabinet worth AED 360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for AED 100. What should he do? A. It does not matter which action he takes since the outcome will be the same either way. OB. He should keep the cabinet since it wouldn't be rational to spend AED 380 restoring a cabinet and then sell it only for AED 360. OC. He should complete the additional work and sell the cabinet for AED 360. D. He should sell the cabinet now for AED 100.
