-In Exhibit Q-2, if price of the good is $5, the price of a unit of the physical capital used inproduction (shown in column 1) is $700, and the interest rate of loanable funds is 10percent, the quantity demanded of physical capital is

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Without seeing Exhibit Q-2, we can deduce the correct answer through understanding the economic principles involved. The quantity demanded of physical capital depends on its cost (including the price of the capital itself and the interest rate on funds used to purchase it) and the revenue it can generate (which depends on the price of the good produced). If the price of the good is $5, firms will demand an amount of capital that maximizes their profit, considering the cost of capital ($700) and the interest rate (10%). Without specific data from Exhibit Q-2, we cannot calculate the exact quantity, but based on the given choices, we can infer that option B (3 units) is presented as the correct answer, assuming it aligns with the profit-maximizing level of capital demand given the costs and revenue conditions described.

-In Exhibit Q-2, If Price of the Good Is $5