All of the Following Statements Are Correct Except

question 84

Multiple Choice

All of the following statements are correct except

• A)the supply of capital is derived from the value of marginal product of capital.
• B)the lower the rental rate of capital,other things remaining the same,the greater is the quantity of capital demanded.
• C)the higher the rental rate,other things remaining the same,the greater is the quantity of capital supplied.
• D)profit-maximizing firms hire the quantity of capital services that makes the value of marginal product of capital equal to the rental rate of capital.
• E)if the present value of the future rental payments of an item of capital equipment is less than the cost of buying the capital,the firm will rent or lease the equipment.

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Definitions:

Economy

The large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated.

Market Portfolio

A theoretical bundle of investments that includes every available asset in the market, weighted by market capitalization.

TSX

Toronto Stock Exchange, the primary stock exchange in Canada.