The Demand Curve for Capital Shows

question 142

Multiple Choice

The demand curve for capital shows

• A)the total quantity of capital demanded at each price of the good produced.
• B)marginal revenue product of capital increasing as more capital is used.
• C)marginal revenue product of capital increasing as the price of capital increases.
• D)the marginal revenue product at each price of the good produced.
• E)the total quantity of capital demanded at each price of capital.

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Definitions:

Short-Run Equilibrium

A state in which the quantity supplied equals the quantity demanded within a market, but only for a temporary period due to fixed inputs in production.

Long-Run Equilibrium

A state in which all firms in a market or industry are making normal profits, with no incentives for entry or exit, and all factors of production are perfectly mobile.

Economic Profits

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Industry Exit

The process by which firms leave a market or sector, often due to economic pressures or declining profitability.