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. FIGURE 15-1
-Refer to Figure 15-1.One possible explanation for a shift of the firm's investment demand curve from I₀ to I₁ is

Question

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.

FIGURE 15-1
-Refer to Figure 15-1.One possible explanation for a shift of the firm's investment demand curve from I₀ to I₁ is

Quizplus · Accepted Answer

A shift from I₀ to I₁ indicates an increase in the investment demand for capital-coin-operated coffee machines. This could be caused by an increase in the expected MRP (marginal revenue product) of the machines, such as if the firm anticipates higher demand for coffee on university campuses or higher profits per machine placement. A decrease in interest rates (choice C) could also potentially increase investment demand, but the graph shows a shift to the right rather than a movement along the curve. The other choices do not necessarily explain a shift of the investment demand curve.

The Diagram Below Shows a Firm's Demand for Its Units