If the real interest rate is 4 percent,the marginal product of capital is 2%,the depreciation rate is 10 percent,the tax rate is 0 percent,and capital gain is 1 percent,what is the user cost of capital?

Question

Quizplus · Accepted Answer

The user cost of capital is calculated as the real interest rate plus the depreciation rate minus the capital gain. Here, it is 4% (real interest rate) + 10% (depreciation rate) - 1% (capital gain) = 13%.

If the Real Interest Rate Is 4 Percent,the Marginal Product