Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 2, Problem 6SPPA
To determine
To explain:
The definition of capital with three examples, and also explain the difference between production capital and financial capital.
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What are the four basic factors of production? Provide at least one example of each factor of production and discuss how that factor is used economically.
Which of the following statements about capital are correct?
a) In economic jargon capital is the net worth of a business enterprise.
b) Capital is defined as anything that is produced that then produces other things
c) An increase in capital will grow the economy because capital is a resource in the production process and an increase in resources increases the production possibilities or potential production of the economy.
d) Capital represents the tools that labor uses and thus an increase in capital tends to increase the productivity of labor (and possibly other resources) and that magnifies economic growth.
e) Most technological advances involve improvements to the tools of production, which is capital, so embodiment of new technology in capital is yet another way capital fosters economic growth.
f) increasing capital in the economy has to lead to greater income inequality, since most capital is owned by the rich.…
The 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 process
Chapter 2 Solutions
Foundations of Economics (8th Edition)
Ch. 2 - Prob. 1SPPACh. 2 - Prob. 2SPPACh. 2 - Prob. 3SPPACh. 2 - Prob. 4SPPACh. 2 - Prob. 5SPPACh. 2 - Prob. 6SPPACh. 2 - Prob. 7SPPACh. 2 - Prob. 8SPPACh. 2 - Prob. 9SPPACh. 2 - Prob. 10SPPA
Ch. 2 - Prob. 1IAPACh. 2 - Prob. 2IAPACh. 2 - Prob. 3IAPACh. 2 - Prob. 4IAPACh. 2 - Prob. 5IAPACh. 2 - Prob. 6IAPACh. 2 - Prob. 7IAPACh. 2 - Prob. 8IAPACh. 2 - Prob. 9IAPACh. 2 - Prob. 10IAPACh. 2 - Prob. 11IAPACh. 2 - Prob. 1MCQCh. 2 - Prob. 2MCQCh. 2 - Prob. 3MCQCh. 2 - Prob. 4MCQCh. 2 - Prob. 5MCQCh. 2 - Prob. 6MCQCh. 2 - Prob. 7MCQ
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- Which of the following statements about factors of production is false The term 'factors of production' is another term for resources. The factor of production termed labor means human resources. The factor or production termed land means natural resources.Y The factor of production termed capital means the money which the owners of firms need in order to set their firms up Xarrow_forwardWhich of the following best defines "capital" as a factor of production? Financial assets used by businesses. The money that the owners of a business reinvest from their profits. Instruments, machines, and buildings used in production. The knowledge and skills that people use in production of goods and services.arrow_forward9) In economics, the term plhysical capital A) refers to funds used by businesses to acquire goods and services. B) refers to all manufactured resources used for production. C) refers to the process of raising funds through the stock market. D) defines the stock of merchandise already produced.arrow_forward
- In the circular-flow diagram, which of the following represents a factor market transaction? A) purchase of a new t.v. B) Expenditure on a new pair of pants. C) Payment for a haircut. D) Payment for raw materieals in the production of bikes.arrow_forwardWhat is a labor abundant economy? A higher level of capital per worker No labor input in the production system Production that require a high level of capital Production that requires a low level of capitalarrow_forwardDraw a circular-flow diagram. Identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities. Sam pays a storekeeper $1 for a quart of milk. Sally earns $4.50 per hour working at a fast food restaurant. Serena spends $7 to see a movie. Stuart earns $10,000 from his 10 percent ownership of Acme Industrial.arrow_forward
- Please provide a short and concise answer to the following question: How is capital defined in economics?arrow_forwardWhich of the following is/are examples of physical capital (K)? A. Pine trees in the great northwestern US forests. B. a table saw used to produce furniture in cabinetry shop. C. the most efficient blueprint of auto production. O D. Bob is receiving on the job training to prepare to become a maintenance electrician.arrow_forward:Answer the following problem. Write all the given data, formula, solutions and requirements.arrow_forward
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