Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 27, Problem 2CQ
To determine
Definition of capital investment and its importance in production.
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Chapter 27 Solutions
Economics: Private and Public Choice
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- Explain the concept of investment opportunity set in more than 250 words.arrow_forwardHow does economic profits differ from Financial Profits? Give some examples.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
- What is meant by the term cost of living? Define and explain it.arrow_forwardWhat is the opportunity cost of investing in a physical capital?arrow_forwardWhich variables are now having an effect on business, and which challenges will be faced by companies in the United States in the next years?arrow_forward
- Which of the following situations represents investment? Saving? ExplainYour family takes out a mortgage and buys a new house. You use your paycheque to buy stock in Sagicor Financial Services.arrow_forwardAccording to economists, which one of the following is considered to be capital? A. a pair of stockings B. a bulldozer C. a share of IBM stock D. a savings accountarrow_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
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