πŸ“’ Too many exams? Don’t know which one suits you best? Book Your Free Expert πŸ‘‰ call Now!

  • google app store apple app store
  • βœ–

      Question

      A firm should increase investment when

      :
      A MEC < i Correct Answer Incorrect Answer
      B MEC = i Correct Answer Incorrect Answer
      C MEC > i Correct Answer Incorrect Answer
      D MEC = 1 Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      A firm should increase investment when Marginal efficiency of capital is greater than i. This is because the present value PV of future returns to capital needs to be higher than the cost of capital, Ck. These variables can be expressed as follows:

      Practice Next
      More Microeconomics Section Tests Questions
      ask-question