In General,a Profit- Maximizing Firm Will Purchase a Unit of Capital

question 70

Multiple Choice

In general,a profit- maximizing firm will purchase a unit of capital as long as its purchase price is

• A)less than its present marginal revenue product.
• B)equal to the present value of the stream of marginal revenue product generated by the capital.
• C)no more than the present value of the stream of marginal revenue product generated by the capital.
• D)no less than the present value of the stream of marginal revenue product generated by the capital.
• E)non- negative.

---

Definitions:

Court Determination

A formal decision or judgment made by a court following a legal proceeding.

Fair Dealing

A legal doctrine aiming to ensure honesty and fairness in transactions and agreements, preventing parties from taking advantage of each other.

Franchise Arrangement

A business model that allows individuals or entities to operate their business using the branding and systems of an established company in exchange for a fee.

Winding Up

The second of two stages in the termination of a partnership or corporation, in which the firm’s assets are collected, liquidated, and distributed, and liabilities are discharged.