Which of the following statements regarding equilibrium in the markets for capital and for a natural resource used in producing a good is true?
A) The marginal revenue product of capital will equal the rental price of capital and the marginal revenue product of the natural resource will equal the price of the natural resource.
B) The rental price of capital will equal the price of the natural resource.
C) The marginal product of capital will equal the rental price of capital and the marginal product of the natural resource will equal the price of the natural resource.
D) The marginal revenue product of capital will equal the marginal revenue product of the natural resource.
A
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According to supply-siders, an switch from consumption to savings by households will
a. lead to a permanent increase in output-per-worker. b. lead to a temporary increase in output-per-worker. c. lead to a decline in output-per-worker. d. not change output-per-worker.
Refer to Figure 18.7 below. The intercept point N is actually found by I 1 + I 0 (1 + r). The intercept point M is calculated by I 0 + I 1 /(1 + r). Show that the slope of the budget constraint is indeed 1-r| .
