The Arbitrage Condition for Capital Demonstrates That Under Profit-Maximizing Conditions

question 106

Multiple Choice

The arbitrage condition for capital demonstrates that under profit-maximizing conditions:

• A) returns to a bank account are equal to the return to capital.
• B) returns to a bank account are equal to the user cost of capital.
• C) if taxes are zero, profits are maximized.
• D) profit maximizing will yield the optimal amount of capital a firm should buy.
• E) the user cost is less than the marginal product of capital.

---

Definitions:

Distorted Perceptions

Instances where one's understanding or interpretation of sensory information does not accurately reflect reality.

Manipulative

Characterized by the skillful handling, controlling, or influencing of others in a clever or unscrupulous way.

Identity

The distinct personality of an individual regarded as a persisting entity; one's sense of self, defined by personal, social, and sometimes cultural dimensions.

Personality Disorder

A type of mental disorder characterized by enduring maladaptive patterns of behavior, cognition, and inner experience.