If a Business Makes the Determination That an Investment Makes

question 107

Multiple Choice

If a business makes the determination that an investment makes sense at the current interest rate but before they can act the interest rates fall

• A)they will have to recalculate whether it still makes sense.
• B)it will only make the situation better so they will clearly make the investment.
• C)it will cause them to not make the investment regardless of the decrease.
• D)they will go ahead with the investment because interest rates have nothing to do with whether an investment makes sense.

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Definitions:

Property Rights

Legal rights to own, use, and dispose of assets, which can include intellectual property, land, or personal property.

Common Resources

Resources that are available to all but are susceptible to overuse because of their non-excludable and rivalrous nature, leading to potential depletion or degradation.

Socially Optimal

A state of the market where resources are allocated in the most efficient manner, maximizing the overall benefit to society.

Negative Externality

An economic situation where a third party is negatively affected by the outcome of a transaction or activity, for instance, pollution affecting the health of nearby residents who are not involved in the polluting activity.