When the opportunity cost of capital is matched with the benefits from adding to the capital stock,

When the opportunity cost of capital is matched with the benefits from adding to the capital stock, the marginal product of capital, we have:

Select one:

a the optimal production function

b the optimal stock of capital

c the optimal combination of primary factors of production

d the optimal stock of assets

If total production in the economy is described by the Cobb-Douglas production function Y=AKaL1-a and a = 025, then the share of output going to capital is:

Select one:

a 075

b 025*Y

c 025

d 075*Y

Australia’s recent large trade deficits:

Select one:

a are not unusual compared with earlier years and should not pose a problem as long as the foreign savings are well invested in the Australian economy

b are a result of unfair trading practices by Australia’s trading partners and pose a serious problem for Australian policy makers

c are a serious policy problem as they reflect speculative investments that are unlikely to provide sufficient returns

d are unusual compared with earlier years and reflect large government budget deficits

 

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