This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: When a company's depreciation is larger than its gross investment, net investment becomes negative ... (Read 118 times)

armygirl

  • Hero Member
  • *****
  • Posts: 556
on: Jun 29, 2018
When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases. Is the previous statement correct or incorrect? Explain your answer.
 
  What will be an ideal response?

Question 2

Increasing a tariff will ________ the domestic quantity consumed of the good, while ________ the domestic production of the good.
 
  A) increase; increasing
  B) increase; decreasing
  C) decrease; increasing
  D) decrease; decreasing


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

mohan

  • Sr. Member
  • ****
  • Posts: 362
Reply #1 on: Jun 29, 2018
Answer to Question 1

The statement is correct. Net investment equals gross investment minus depreciation. If depreciation is larger than gross investment, net investment will be negative. Net investment is the change in the capital stock, and so the company's capital stock decreases. Essentially, because depreciation is larger than the company's gross investment, the company is not buying enough capital to replace the capital that depreciated. As a result, the total amount of the company's capital decreases.

Answer to Question 2

C


armygirl

  • Member
  • Posts: 556
Reply 2 on: Jun 29, 2018
Gracias!

komodo7

  • Member
  • Posts: 322
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Did you know?

Signs and symptoms of a drug overdose include losing consciousness, fever or sweating, breathing problems, abnormal pulse, and changes in skin color.

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

Did you know?

About 600,000 particles of skin are shed every hour by each human. If you live to age 70 years, you have shed 105 pounds of dead skin.

Did you know?

The Centers for Disease Control and Prevention has released reports detailing the deaths of infants (younger than 1 year of age) who died after being given cold and cough medications. This underscores the importance of educating parents that children younger than 2 years of age should never be given over-the-counter cold and cough medications without consulting their physicians.

Gram-positive and Gram-negative bacteria. Gram-positive and Gram-negative bacteria.
Gram-positive and Gram-negative bacteria. Gram-positive and Gram-negative bacteria.
Steel-toed shoes are a worthwhile investment to help prevent foot injury due to falling objects. ... Steel-toed shoes are a worthwhile investment to help prevent foot injury due to falling objects. ...
Touch the test light to the negative (–) terminal of the battery or a good engine ground to check ... Touch the test light to the negative (–) terminal of the battery or a good engine ground to check ...
Control of thyroxine secretion through negative feedback. Control of thyroxine secretion through negative feedback.
Positive and Negative Punishment Positive and Negative Punishment
Video: First Stage of Labor and Delivery Video

For a complete list of videos, visit our video library