Author Question: Why are interest rates considered to be the opportunity cost of ... (Read 26 times)

ap345 · **on:** Jun 30, 2018

Why are interest rates considered to be the opportunity cost of investments?

Question 2

Economies of scope is when a firm obtains a production advantage from producing more than one product.
Indicate whether the statement is true or false

soda0602 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Interest rates reflect peoples' preference for consumption goods that are available immediately (or sooner) over goods that are only available later. They also reflect the productivity of investment as savings are used to purchase capital goods that produce output over longer spans of time. Interest is an opportunity cost. Investments that produce income over the future must entail forgone consumption in the present.

Answer to Question 2

True