Once the marginal product of capital is equal to the real rental cost of capital ________
A) inventories will stabilize
B) depreciation will equal the marginal rate of substitution
C) the economy will reach full employment
D) a profit-seeking firm will stop acquiring capital
D
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In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of a fall in the nominal interest rate?
A) The demand for money curve would shift rightward to MD2. B) The demand for money curve would shift leftward to MD0. C) There would be a movement upward along the demand for money curve MD1. D) There would be a movement downward along the demand for money curve MD1.
Profit (or loss) per unit at the profit maximizing (or loss minimizing) level of output
A. is MN.
B. is LM.
C. is LN.
D. cannot be found on this graph.