Question: Venus is opening a tennis school. She plans to hire a marketing graduate to promote and manage the school at $20 an hour. Venus is also considering buying or leasing a new tennis ball machine. The purchase price of the machine is $1,000 and after three years it is worthless. The annual cost of leasing the machine is $500.
a. In which factor markets does Venus operate?
b. What is the price of the capital equipment and the rental rate of capital?