Macroeconomics
Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
Question
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Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution
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Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

(b)

To determine

The price of capital equipment.

(b)

Expert Solution
Check Mark

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

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