Figure 25-1

question 44

Multiple Choice

Figure 25-1.On the horizontal axis,K/L represents capital (K) per worker (L) .On the vertical axis,Y/L represents output (Y) per worker (L) .
-Refer to Figure 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

• A)In the long run,a higher saving rate leads to a higher growth rate of productivity.
• B)In the long run,a higher saving rate leads to a higher growth rate of income.
• C)Returns to capital become increasingly smaller as the amount of capital per worker increases.
• D)All of the above are correct.

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Definitions:

Operating Lease

A contract that allows for the use of an asset but does not convey rights of ownership of the asset.

After-Tax Cost

The actual cost to a company or individual after considering the effects of taxes, often used in evaluating the cost of financing options.

Leasing Analysis

It is the examination of the financial aspects of leasing to determine whether leasing is a more viable option than purchasing.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in alignment with the firm's goal of shareholder value maximization.