Up to which point will a perfectly competitive firm continue to invest? Explain carefully
What will be an ideal response?
A perfectly competitive profit-maximizing firm will keep investing in new capital up to the point at which the expected rate of return is equal to the interest rate. This is equivalent to saying that the firm will continue investing up to the point at which the marginal revenue product of capital is equal to the price of capital, or MRPK = PK.
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An example of price floor is
a. Minimum wages b. Rent controls in New York c. Both a and b d. None of the above
The economic way of thinking indicates that personal benefits and costs influence the actions of
What will be an ideal response?
The market for loanable funds is a market in which:
A. borrowers supply funds to savers, who want loans for their investment spending needs. B. borrowers buy and sell loans. C. savers interact to set the interest rate for loans. D. savers supply funds to those who want to borrow for their investment spending needs.
Economists say that the economy is at "full employment" when the:
A. structural unemployment rate is zero. B. total unemployment rate is zero. C. frictional unemployment rate is zero. D. cyclical unemployment rate is zero.