1. Which of the following inputs do you think to include relatively large economic rents in their earnings?

a. Nuts and bolts

b. Petroleum

c. A champion racehorse

2. a)Distinguish between investment and capital,

b) Explain the difference between an invention and an innovation. Give an example of each.

3. What is the difference between interest and profit? Who earns interest, in return for what contribution to production? Who earns economic profit, in return for what contribution to production?

4. Compute the present value of $1,000 to be received in three years if the rate of interest is 11 percent.

5. A government bond pays $100 in interest each year for Three years and also returns the principal of $1,000 in the third year. How much is it worth in terms of today's money if the rate of interest is 8 percent? If the rate of interest is 12 percent