The optimum rate of investment for a firm is found at the point where:
A) The marginal productivity of capital equals the market gross rate.
B) The supply of capital equals the demand for capital.
C) Total investment equals total savings.
D) The firm's indifference curve is just tangent to the market line.
E) None of the above.

Question

Quizplus · Accepted Answer

The optimum rate of investment is where the marginal productivity of capital equals the market gross rate, as this is where the firm maximizes its returns on investment.

The Optimum Rate of Investment for a Firm Is Found