The Equilibrium Price of Capital

question 59

Multiple Choice

The equilibrium price of capital

• A)is not affected by a government subsidy on the rental of capital by firms.
• B)decreases if the government subsidizes the rental of capital by firms because the demand curve for capital shifts to the left.
• C)increases if the government subsidizes the rental of capital by firms because the demand curve for capital shifts to the right.
• D)increases if the government subsidizes the rental of capital by firms because the supply curve for capital shifts to the left.
• E)decreases if the government subsidizes the rental of capital by firms because the supply curve for capital shifts to the right.

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Definitions:

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