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.

Economics

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If actual inflation is greater than expected inflation, what is the relationship between the actual real wage and the expected real wage?

A) The actual real wage will be equal to the expected real wage. B) The actual real wage will be lower than the expected real wage. C) The actual real wage will be higher than the expected real wage. D) The relationship between the actual real wage and the expected real wage cannot be predicted.

Economics

Assume that James owns a wheat farm that produces an annual crop of 500 bushels. His only choice is to store it in a nearby grain elevator owned by Martin, whose facility will be empty unless James is using it. Martin contracts with James to provide storage at $5 per bushel every month. In this example James and Martin are in:

a. probabilistic positions. b. asymptotic positions. c. hypothetical positions. d. symmetric positions.

Economics