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salonijainnn salonijainnn
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A year ago

The diagram below shows a firm's demand for its units of capital-coin-operated coffee machines. The firm places its machines in universities and colleges across Canada.

Short description: A graph plots the flow of investment in the number of coffee machines against interest rate. Long description: The horizontal axis representing the flow of investment in the number of coffee machines ranges from 250 to 750, in increments of 250. The vertical axis represents the interest rate. The graph shows a concave up decreasing curve, I subscript 0. A dashed concave up decreasing curve above the previous curve represents I subscript 1 and a dashed concave up decreasing curve below the previous curve represents I subscript 2. All the curves begin at different points in the top-left and end at different points in the bottom-right.

FIGURE 15-1

Refer to Figure 15-1. The downward slope of the firm's investment demand curve can be explained by



▸ the relationship between the MRP of the coffee machine and technology improvements to the coffee machines.

▸ the downward slope of the marginal cost of capital curve.

▸ the negative relationship between the interest rate and the present value of a future stream of MRPs generated by each coffee machine.

▸ the downward slope of the demand curve for the firm's product-cups of coffee.

▸ the negative relationship between the interest rate and the purchase price of the coffee machines.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
Author:
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shadowblacwshadowblacw
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A year ago
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