A Change in the Capital Stock

question 119

True/False

A change in the capital stock,
, can be expressed as a function of the saving rate,
output,
the capital stock,
; and the depreciation rate,
, as
.

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Definitions:

Profit

The financial gain realized when the amount of revenue gained exceeds the expenses, costs, and taxes needed to sustain the operation.

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Perfectly Competitive

A type of market where numerous small firms compete against each other offering products that are virtually interchangeable and where no single company can dictate the market price.

Marginal Productivity

The additional output that is produced by employing one more unit of a particular input, holding other inputs constant.