Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 27, Problem 2CQ
To determine
Definition of capital investment and its importance in production.
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Distinguish between investment and capital?
What is the opportunity cost to the society of investing in capital?
How do economies of scale affect business models in manufacturing industries, and how can smaller companies compete with larger, more established firms?
Chapter 27 Solutions
Economics: Private and Public Choice
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- Which of the following is an example of capital as a factor of production? Group of answer choices Stocks Bonds money Equipment used by businessesarrow_forwardExplain the concept of investment opportunity set in more than 250 words.arrow_forward“An economy which does not have a strong manufacturing infrastructure cannot continue to make required investment on itself. An economy that grows only by service sector means that it is built on sand.” Sony Member and CEO Akia Morito 1992. Do you agree with Akia Morito’s idea?arrow_forward
- Discuss the three potential factors that may motivate a firm to invest abroad.arrow_forwardThe term capital, as used by economists, refers to a money b the physical space in which production occurs c the time allocated to producing goods and services d financial securities such as stocks and bonds e machinery and equipment that is not used up during the production processarrow_forwardbuilding a startup as a global business requires managers to think earlier and faster than their predecessors of even a generation ago. In a short paragraph, explain why this is a case.arrow_forward
- Explain cost of capital .arrow_forwardFirms raise capital by: Select one: a. Selling stock (equity) b. Issuing bonds or taking out loans (debt) c. Using retained earnings (a form of equity) d. All points mentionedarrow_forwardWhat is the opportunity cost of investing in a physical capital?arrow_forward
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