In the absence of any capital market imperfections, costs or taxes, equilibrium value of marginalis 1. Select one True False Hayashi proved that when Firms are price takers and the production and cost functions are homogenous, then average Qequals marginal Q. There is a fourth condition which is often ignored but at times important. This is called the Transversality condition and is written as follows: The condition says that, at the end of time (as T approaches infinity), there should not be any capital left over. To understand this condition, think of the cake eating example. In the last period, the optimal decision was to consume the whole cake so that cake size at the end of the last period was zero. If any cake was left over, you were over-saving which is not optimal. The transversality condition is merely an extension of this result to infinite periods. Now that you have an idea of the transversality condition, which among these conditions do you think would most likely lead to a violation of this transversality condition and thereby violating Hayashi's proposition Select one: O a Excess accumulation of capital driven by precautionary reasons arising from an uncertainty shock such as the COVID-19 pandemic ob. Excess accumulation of capital driven by an economic boom . Excess accumulation of capital driven by good news such as an expected interest rate drop d. Excess accumulation of capital driven by continuous and persistent technological innovations