The costs associated with the user cost of capital include all of the following,except
A) the real price of the capital good.
B) the expected change in the marginal cost of capital based on expectations of the future.
C) the real interest cost of borrowing to finance the purchase of the capital good.
D) the depreciation costs associated with actually using the capital good.

Question

Quizplus · Accepted Answer

The costs associated with the user cost of capital include the real price of the capital good, the real interest cost of borrowing to finance the purchase of the capital good, and the depreciation costs associated with actually using the capital good. However, the expected change in the marginal cost of capital based on expectations of the future is not considered a cost, but rather a factor that affects the decision to invest in a capital good.

The Costs Associated with the User Cost of Capital Include