ADVANCED ANALYSIS User cost is equal to the present value of future profits in the model presented
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ADVANCED ANALYSIS User cost is equal to the present value of future profits in the model presented in Figure 27W.7 . Will the optimal quantity to mine in the present year increase or decrease if the market rate of interest rises?
Does your result make any intuitive sense? (Hint: If interest rates are up, would you want to have more or less money right now to invest at the market rate of interest?)
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