The marginal benefit from investment for a firm is equal to
A) $\frac { M P ^ { \prime } { } _ { K } { } ^ { + 1 - d } } { ( 1 + r ) }$.
B) $\frac { M P ^ { \prime } { } _ { K } { } ^ { + 1 + d } } { ( 1 + r ) }$.
C) $\frac { M P ^ { \prime } { } _ { K } ^{( 1 - d ) }} { ( 1 + r ) }$.
D) $\frac { M P ^ { \prime } { } _ { K } ^{- 1 + d }} { ( 1 + r ) }$.
E) $\frac { M P ^ { \prime } { } _ { K } ^{- 1 - d } }{ ( 1 + r ) }$.

Question

Quizplus · Accepted Answer

The marginal benefit from investment is equal to the marginal product of capital divided by the discount factor, which is (1 + r). The marginal product of capital is the change in output resulting from a one-unit increase in capital. The discount factor is the present value of a future dollar, which is less than one because of the time value of money.

The Marginal Benefit from Investment for a Firm Is Equal MP′K+1−d(1+r)\frac { M P ^ { \prime } { } _ { K } { } ^ { + 1 - d } } { ( 1 + r ) }(1+r)MP′K​+1−d​

The Marginal Benefit from Investment for a Firm Is Equal $\frac { M P ^ { \prime } { } _ { K } { } ^ { + 1 - d } } { ( 1 + r ) }$