Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?
For Robinson Crusoe, engaging in capital investment involves producing tools now that would increase his consumption possibilities in the future. Examples might include making a net for fishing or constructing a tool that enables him to pick fruit faster. By engaging in these activities, he will not be able to use the time to fish and pick fruit for immediate consumption. He sacrifices consumption and gains the ability to consume more fish and more fruit in the future.
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Decrease in stock market wealth will ________ the expenditure curve:
A) decrease. B) increase. C) not change. D) none of the above.
Firms achieve productive efficiency in the long run by
a. striving to minimize fixed cost b. striving to maximize revenue c. producing at their minimum long-run average cost d. producing at their minimum long-run marginal cost e. producing the output consumers want most