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 68 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?

Oxytocin is recommended only for pregnancies that have a medical reason for inducing labor (such as eclampsia) and is not recommended for elective procedures or for making the birthing process more convenient.

Did you know?

The B-complex vitamins and vitamin C are not stored in the body and must be replaced each day.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

Did you know?

The most common treatment options for addiction include psychotherapy, support groups, and individual counseling.

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Risks of infectious disease increase in (a) high-density agricultural populations compared to (b) lo Risks of infectious disease increase in (a) high-density agricultural populations compared to (b) lo
Young adults increase in self-esteem between the ages of 18 and 25, according to this longitudinal s Young adults increase in self-esteem between the ages of 18 and 25, according to this longitudinal s
In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con
The Increase in Divorce The Increase in Divorce
Marginal Supply - Demand Curve Marginal Supply - Demand Curve
China has relied on cheap coal to meet its demand for energy China has relied on cheap coal to meet its demand for energy
Video: Retina

For a complete list of videos, visit our video library