In a Small Country Each Labor Hour Has Capital Stock

question 7

Multiple Choice

In a small country each labor hour has capital stock equal to 900 units. This year it produced 20 units of new capital goods, with a depreciation rate of 20 percent, and a production function of . What will its level of capital stock per labor hour be next year?

• A) 920 units
• B) 720 units
• C) 900 units
• D) 740 units

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Definitions:

Market System

An economic system where the allocation of resources and the distribution of goods and services are determined by supply and demand in a free market.

Government Prescribes

Refers to regulations or directives made by a government to influence or control certain activities.

Private Property

Land or belongings owned by individuals or corporations, distinct from property owned by the government or community.