If a Firm Can Borrow or Lend at a 10

question 30

Multiple Choice

If a firm can borrow or lend at a 10 percent annual interest rate, it will

• A)buy all units of capital with a marginal rate of return above 10 percent
• B)buy all units of capital with an average rate of return above 10 percent
• C)buy all units of capital with a marginal rate of return below 10 percent
• D)buy all units of capital with an average rate of return below 10 percent
• E)select only the unit of capital with the highest marginal rate of return, assuming it is above 10 percent

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Definitions:

Generate Income

The process of creating revenue or earnings through various sources such as work, investments, or business activities.

Converted

Changed or transformed from one state, form, or function to another.

Weak Euro

A situation where the European Union's currency, the euro, has lower value compared to other major currencies, affecting international trade and economic policies.