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

Author Question: Investment demand is downward sloping because A) an increase in investment demand causes interest ... (Read 93 times)

mspears3

  • Hero Member
  • *****
  • Posts: 586
on: Jul 1, 2018
Investment demand is downward sloping because
 
  A) an increase in investment demand causes interest rates to fall.
  B) at lower interest rates, firms will undertake more investment.
  C) at lower interest rates, firms will undertake less investment.
  D) None of the above.

Question 2

Suppose coal sells for 50 per ton and can be mined at a constant marginal cost of 20 per ton. Forecasters predict that the price of coal next year will be 55. If your marginal cost next year will still be 20 and the interest rate is 10, do you sell coal today?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

marict

  • Sr. Member
  • ****
  • Posts: 304
Reply #1 on: Jul 1, 2018
Answer to Question 1

B

Answer to Question 2

You are indifferent if coal prices rise (10 of 50 - 20 ) by 3. Since coal prices are expected to rise by 5, you will wait until next year.


mspears3

  • Hero Member
  • *****
  • Posts: 586
Reply #2 on: Jul 1, 2018
Correct answers!


marict

  • Sr. Member
  • ****
  • Posts: 304
Reply #3 on: Jul 1, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

Did you know?

By definition, when a medication is administered intravenously, its bioavailability is 100%.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

IgA antibodies protect body surfaces exposed to outside foreign substances. IgG antibodies are found in all body fluids. IgM antibodies are the first type of antibody made in response to an infection. IgE antibody levels are often high in people with allergies. IgD antibodies are found in tissues lining the abdomen and chest.

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

Analogy for How Magnetic Field Strengths Increase Analogy for How Magnetic Field Strengths Increase
Does Intelligence Increase with Brain Size? Does Intelligence Increase with Brain Size?
The steel lamination used in an E coil helps increase the magnetic field strength, which helps the ... The steel lamination used in an E coil helps increase the magnetic field strength, which helps the ...
Growth in the demand for oil from the developing world Growth in the demand for oil from the developing world
How an Increase in Income Inequality Affects the Desired Tax Rate How an Increase in Income Inequality Affects the Desired Tax Rate
Keeping your feelings to yourself may increase your stress level Keeping your feelings to yourself may increase your stress level
Video: Rods and Cones Animation

For a complete list of videos, visit our video library