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

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

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

▸ non-negative.

▸ no more than the present value of the stream of marginal revenue product generated by the capital.

▸ less than its present marginal revenue product.

▸ equal to the present value of the stream of marginal revenue product generated by the capital.

▸ no less than the present value of the stream of marginal revenue product generated by the capital.

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Microeconomics

Edition: 17^th

Author: Ragan

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