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 111 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!

kalskdjl1212

  • Member
  • Posts: 353
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Did you know?

The term pharmacology is derived from the Greek words pharmakon("claim, medicine, poison, or remedy") and logos ("study").

Did you know?

The U.S. Pharmacopeia Medication Errors Reporting Program states that approximately 50% of all medication errors involve insulin.

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Gram-positive and Gram-negative bacteria. Gram-positive and Gram-negative bacteria.
Crystallized negative stain salts Crystallized negative stain salts
negative feedback loop negative feedback loop
coagulase negative Staphylococcus on Blood agar coagulase negative Staphylococcus on Blood agar
Negative feedback control of the female reproductive hormones Negative feedback control of the female reproductive hormones
A company purchased 26 desks for $240 each and 18 chairs for $59 each. Compute the total ... A company purchased 26 desks for $240 each and 18 chairs for $59 each. Compute the total ...
Video: Blood Flow Through the Kidneys

For a complete list of videos, visit our video library