Distinguish between investment goods and consumption goods. If you buy a car, is it investment or consumption? What if IBM buys a car? Are inventories a consumption or investment good?
What will be an ideal response?
Investment goods include the purchase of capital by firms and the purchases of homes by households. A car purchased by an individual is consumption, a car purchased by IBM is an investment good. Inventories are counted as an investment good.
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According to the economic way of thinking, it is efficient to support a system of law and order through taxation because
A) we need law and order. B) law and order are not free goods. C) law and order create significant spillover benefits. D) citizens ultimately despise law and order.
A price searcher faces the following demand curve: At $9, $8, $7, and $6, the quantity demanded is 10, 20, 30, and 40 units, respectively. If the firm's marginal cost is $50 at any level of output, it would maximize net revenues by
A) producing 10 units and charging $9. B) producing 20 units and charging $8. C) producing 30 units and charging $7. D) producing 40 units and charging $6. E) charging $50 plus markup.