When making the decision to invest, the evaluation of the expected flow of futur
ID: 1113683 • Letter: W
Question
When making the decision to invest, the evaluation of the expected flow of future productive services that the investment project being considered will yield is an important consideration.
This statement is accurate for
A.
firms and households, but not for governments considering an investment project.
B.
firms and governments, but not for households considering an investment project.
C.
firms, households, and governments.
D.
firms, but not for governments and households considering an investment project.
The expected cost of an investment
A.
equals the market rate of interest plus the normal rate of return on an investment.
B.
is zero if a firm uses its own funds.
C.
equals the market rate of interest plus the inflation rate.
D.
depends on the market interest rate.
Examining the equilibrium conditions of individual markets and for households and firms separately is referred to as
A.
general equilibrium analysis.
B.
comparative statics.
C.
efficiency analysis.
D.
partial equilibrium analysis.
It is essential to establish specific criteria to judge the performance of any economic system. One such criterion is
A.
profit opportunity.
B.
achieving general equilibrium.
C.
efficiency.
D.
technological progress.
Efficiency occurs when
A.
all markets are in equilibrium.
B.
the economy is producing what people want at least possible cost.
C.
the economy has a fair and just distribution of income.
D.
unemployment is low and prices are stable.
A new technology is developed for producing microwave ovens that reduces production costs by 10%.
Which of the following is the most likely consequence of this technological change?
A.
This new technology will not affect efficiency, but it will change the equilibrium price and quantity for this industry.
B.
If firms do not adopt this new technology, then the economy will remain in general equilibrium, because firms will not change their price and output decisions.
C.
Firms will continue to operate efficiently as long as no firm adopts this new technology.
D.
Firms must adopt this new technology to remain efficient.
A condition in which no change is possible that will make some members of society better off without making some other members of society worse off is called
A.
Pareto optimality.
B.
market failure.
C.
general equilibrium.
D.
partial equilibrium.
Explanation / Answer
1) A. Investment depends on return only for household and firms not for govt.
2)C. Expected rate of return=inflation +rate of return
3)D. Partial equilibrium i.e. Different equilibrium for different firms household etc
4)C. Efficiency is best way ro check performance of economic system
5)B. Efficiency means cost is minimised
6)D
7)A
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