If R Is the Real Interest Rate, W Is the Real

question 11

Multiple Choice

If R is the real interest rate, w is the real wage, MPK is the marginal product of capital, and MPL is the marginal product of labor, which of the following conditions informs the profit-maximizing firm how much capital to invest?

• A) R = MPK
• B) R = w
• C) R = 0 and MPK= MPL
• D) MPK = MPL
• E) MPK \(\gt\) MPL if R \(\lt\) w

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Definitions:

Null Hypothesis

A proposal in statistics that suggests no observable effect or no association between variables, serving as a premise to be tested against experimental evidence.

Groups

Collections of individuals or items that are studied in research to observe, measure, and analyze certain behaviors or outcomes.

Critical Value

The threshold value that the test statistic must exceed in order to reject the null hypothesis in a statistical test.

Groups

Collections of subjects, participants, or data points that are studied and compared in research to assess the impact of varying conditions.