Explain the difference between the capital stock, gross investment, depreciation, and net investment
What will be an ideal response?
The capital stock is the total quantity of plant, equipment, buildings, and inventories. Gross investment is the purchase of new capital. Depreciation is the wearing out and scrapping of capital. Net investment equals gross investment minus depreciation. The change in the capital stock from one period to the next equals net investment.
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Misty spends her entire weekly allowance of $15 on two goods: T-shirts (which cost $10 each) and lipstick (which costs $5)
What is the opportunity cost of a T-shirt? If her parents raise her allowance to $20 per week, what happens to the opportunity cost of a T-shirt?
An important difference between a perfectly competitive firm and a monopolist is
A) the size of the firms. B) the shape of the demand curve each faces. C) the goals of the owners of the firms. D) a monopolist normally produces a service, while a perfect competitor normally produces a good.