How can lack of investment in social capital affect private ...

[tnt_battle]

How can lack of investment in social capital affect private firms' profits?
 
  What will be an ideal response?

Question 2

Refer to Figure 16-11. In the graph above, the shift from AD1 to AD2 represents the total change in aggregate demand. If government purchases increased by 50 billion, then the distance from point A to point B ________ 50 billion.
 
  A) would be greater than B) would be equal to
  C) would be less than D) may be greater than or less than

[ryhom]

Answer to Question 1

Most social capital is in the form of roads, transit systems, fire services, police services, water, and sewer systems. All businesses use some combination of these services to conduct their business. For example, when transportation systems are inadequate, labor may be prevented from producing goods and services, or goods and services may be prevented from being sold. Either scenario will reduce a firm's overall profits by reducing quantity sold and therefore total revenue.

Answer to Question 2

A