When the labour and capital markets clear:
A)depreciation is zero.
B)real profit is zero.
C)a dollar today is worth more than a dollar in the future.
D)all of the above.

Question

Quizplus · Accepted Answer

When the labour and capital markets clear, it means that supply matches demand and all resources are being optimally allocated. In this scenario, real profit is zero, as firms are not making excessive profits by exploiting market inefficiencies. Depreciation being zero and a dollar today being worth more than a dollar in the future are not necessarily linked to the clearing of labour and capital markets, and do not have a direct impact on real profit.

When the Labour and Capital Markets Clear