Which of the Following Statements Is Correct

question 482

Multiple Choice

Which of the following statements is correct?

• A)The market for capital is unlike the market for labor because the rental price of capital is unaffected by the marginal product of capital, whereas the price of labor is affected by the marginal product of labor.
• B)The market for capital is unlike the market for labor because the purchase price of capital is unaffected by the marginal product of capital, whereas the price of labor is affected by the marginal product of labor.
• C)The market for capital is like the market for labor because the rental price of capital is affected by the marginal product of capital, and the price of labor is affected by the marginal product of labor.
• D)Both a and b are correct.

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Definitions:

Natural Scarcity

A situation where resources are limited in availability due to natural conditions, not enough to meet unlimited human wants.

Usury Laws

Usury Laws are regulations governing the interest rate that can be charged on a loan, designed to protect consumers from excessively high rates.

Free Market

An economic system where prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government or other authority.

Entrepreneur

An individual who, instead of working as an employee, runs a small business and assumes all the risks and rewards of a given business venture.