Answer the following questions. (a) Can production satisfy both constant returns to scale and diminishing (marginal) returns to capital? (b) Observing a downward trend in the prices of capital goods, some companies decide to decrease or postpone their purchases of such goods. All else equal, will the real interest rate increase or decrease?
Answer the following questions. (a) Can production satisfy both constant returns to scale and diminishing (marginal) returns to capital? (b) Observing a downward trend in the prices of capital goods, some companies decide to decrease or postpone their purchases of such goods. All else equal, will the real interest rate increase or decrease?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer the following questions.
(a) Can production satisfy both constant returns to scale and diminishing (marginal) returns to capital?
(b) Observing a downward trend in the prices of capital goods, some companies decide to decrease or postpone their purchases of such goods. All else equal, will the real interest rate increase or decrease?
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