Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 11, Problem 2.4P
To determine
Households supply capital and firms demand capital.
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Please provide a short and concise answer to the following question:
How is capital defined in economics?
The term capital, as used by economists, refers to
a
money
b
the physical space in which production occurs
c
the time allocated to producing goods and services
d
financial securities such as stocks and bonds
e
machinery and equipment that is not used up during the production process
Explain the term capital in depth
Chapter 11 Solutions
Principles of Economics (12th Edition)
Ch. 11.A - Prob. 1PCh. 11.A - Prob. 2PCh. 11.A - Prob. 3PCh. 11.A - Prob. 4PCh. 11.A - Prob. 5PCh. 11.A - Prob. 6PCh. 11.A - Prob. 7PCh. 11.A - Prob. 8PCh. 11.A - Prob. 9PCh. 11.A - Prob. 10P
Ch. 11.A - Prob. 11PCh. 11.A - Prob. 12PCh. 11 - Prob. 1.1PCh. 11 - Prob. 1.2PCh. 11 - Prob. 1.3PCh. 11 - Prob. 2.1PCh. 11 - Prob. 2.2PCh. 11 - Prob. 2.3PCh. 11 - Prob. 2.4PCh. 11 - Prob. 2.5PCh. 11 - Prob. 2.7PCh. 11 - Prob. 2.8PCh. 11 - Prob. 2.9PCh. 11 - Prob. 3.1PCh. 11 - Prob. 3.2PCh. 11 - Prob. 3.3PCh. 11 - Prob. 3.4PCh. 11 - Prob. 3.5PCh. 11 - Prob. 3.6P
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- Ee 85.arrow_forwardWhich of the following statements about capital are correct? a) In economic jargon capital is the net worth of a business enterprise. b) Capital is defined as anything that is produced that then produces other things c) An increase in capital will grow the economy because capital is a resource in the production process and an increase in resources increases the production possibilities or potential production of the economy. d) Capital represents the tools that labor uses and thus an increase in capital tends to increase the productivity of labor (and possibly other resources) and that magnifies economic growth. e) Most technological advances involve improvements to the tools of production, which is capital, so embodiment of new technology in capital is yet another way capital fosters economic growth. f) increasing capital in the economy has to lead to greater income inequality, since most capital is owned by the rich.…arrow_forward. Give a graphical example of a case where a firm has incentives to invest in capital-saving technology despite low capital prices and high wages.arrow_forward
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- What are the two components of the user cost of capital? What is a capital good for both of the componenets?arrow_forwardPolicymakers trying to promote economic growth must confront the issue of what kinds of capital the economy needs most. If policymakers decide to rely on the marketplace to allocate the pool of saving to alternative types of investment, Those industries with the kinds of capital that yield the lowest marginal product will borrow the most. Those industries with the kinds of capital that yield the highest marginal product will borrow the least. All industries will have incentives to borrow more. Those industries with the kinds of capital that yield the highest marginal product will borrow the most.arrow_forwardFirms raise capital by: Select one: a. Selling stock (equity) b. Issuing bonds or taking out loans (debt) c. Using retained earnings (a form of equity) d. All points mentionedarrow_forward
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