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Determinants of investments:
Expected Rate of Return:
Investment spending is guided by the profit motive; thebusiness sector buys capital goods only when it expects such purchases to be profitable.Real interest rate:
Business firms typically borrow funds to make an investment and to repay their borrowings out of future revenues. Even if they do not borrow, managers know that if they use current revenues to finance investment purchases, they forgo the opportunity to earn interest.The annual opportunity cost of using a cedi to make an investment can therefore be represented by the real interest rate. The real interest rate is the price of using a cedi to make an investment purchase. Thus, the higher the real rate of interest, the less would be the profits to the business after paying interest and the less it will want to invest and vice versa.
Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (
Illustrate about the elasticity of substitution. The Elasticity of Substitution: The technical substitution’s marginal rate measures the slope of an isoquant. As well the el
concept of innovation theory of profit and criticism
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run a s monopoly how will this benefit stakeholders involved, such as the goverment, businesses, and consumers?
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b) Why is monopoly considered to be generally against public interests, and what policy instruments can be used to regulate monopolies?
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