Assume That a Firm Is Considering Building a Factory That

question 112

Multiple Choice

Assume that a firm is considering building a factory that will cost $5 million. It believes that it can get a profit from this factory of $600,000 per year for many years. The interest rate at which the firm can borrow money is 15 percent. After evaluating whether it should build the factory, the firm decides
That it should:

• A)not build because the rate of return on the factory is only 6 percent.
• B)not build because the rate of return on the factory is only 12 percent.
• C)build because the rate of return on the factory is 30 percent.
• D)build because the rate of return on the factory is 35 percent.

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Definitions:

Drive Reduction Theory

A theory of motivation that posits individuals are motivated to take actions in order to reduce the internal tension caused by unmet needs.

Homeostasis

The tendency of a biological system to maintain stable internal conditions despite external changes.

Homeostasis

The tendency of a biological system to maintain stability while adjusting to conditions that are optimal for survival.

Yerkes-Dodson Law

A theory suggesting there is an optimal level of arousal for the best performance of a task; too little or too much arousal can negatively affect task performance.