Why do economists predict that investment increases when the real rate of interest falls?
What will be an ideal response?
When the interest rate falls, the present value of a future stream of payments increases. Some projects that might have been considered unprofitable at a high interest rate become profitable, and therefore are undertaken, at a lower interest rate.
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Suppose we advertise up to the point where the last dollar spent on advertising generates an additional dollar of sales revenue (i.e, the marginal revenue of advertising equals one)
If the full marginal cost of advertising is greater than one, then we will generate: A) less output than the profit maximizing level. B) more output than the profit maximizing level. C) the profit maximizing level of output. D) We don't have enough information to answer this question.
A firm's demand curve for labor coincides with the:
a. marginal cost curve. b. average cost curve. c. marginal revenue curve. d. marginal revenue product curve.