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Difference between marginal efficiency of investment and marginal efficicency of capital?
MEC is the expected rate of return on capital and MEI is the expected rate of return on investment.
Relation between marginal efficiency of capital and marginal efficiency of investment?
MEC is the highest rate of return expected from an additional unit of capital stock over its cost. MEI is the expected rate of return from one additional unit of investmeni.
What is the concept of marginal cost of capital?
The marginal cost of capital (MCC) is the cost of the last dollar of capital raised, essentially the cost of another unit of capital raised. As more capital is raised, the marginal cost of capital rises.
What is the equation for Marginal product of capital in economics?
The marginal product of capital (MPK) in economics is defined as the additional output generated by employing one more unit of capital while holding other inputs constant. It can be mathematically expressed as the partial derivative of the production function ( Q ) with respect to capital ( K ): [ MPK = \frac{\partial Q}{\partial K} ] This indicates how changes in the capital input affect the overall production output.
What is the marginal revenue of capital?
The marginal revenue of capital refers to the additional revenue generated from employing one more unit of capital in the production process. It is an important concept in economics, as it helps firms determine the optimal level of capital investment. If the marginal revenue of capital exceeds the cost of using that capital, firms are incentivized to invest further; if it falls below that cost, they may reduce their capital investment. Ultimately, it helps in assessing the efficiency and profitability of capital utilization.
Difference between marginal efficiency of investment and marginal efficicency of capital?
MEC is the expected rate of return on capital and MEI is the expected rate of return on investment.
How does marginal revenue and marginal utility relate to capital?
Marginal revenue/margina utility return from capital represents the benefit of capital. When determining the optimal amount of capital, we must take into account the point when marginal benefit = marginal cost. This optimises profit/utility.
Relation between marginal efficiency of capital and marginal efficiency of investment?
MEC is the highest rate of return expected from an additional unit of capital stock over its cost. MEI is the expected rate of return from one additional unit of investmeni.
What is the concept of marginal cost of capital?
The marginal cost of capital (MCC) is the cost of the last dollar of capital raised, essentially the cost of another unit of capital raised. As more capital is raised, the marginal cost of capital rises.
How do you compute the Marginal Cost of Capital schedule?
Marginal or incremental cost of capital is cost of the additional capital raised in a given period
What is the equation for Marginal product of capital in economics?
The marginal product of capital (MPK) in economics is defined as the additional output generated by employing one more unit of capital while holding other inputs constant. It can be mathematically expressed as the partial derivative of the production function ( Q ) with respect to capital ( K ): [ MPK = \frac{\partial Q}{\partial K} ] This indicates how changes in the capital input affect the overall production output.
What is advantage of using the marginal cost of capital as a company's average hurdle rate?
Using a hurdle rate can help take the emotion out of defining capital value. This is the advantage of using the marginal cost of capital as the hurdle rate.
What is the marginal revenue of capital?
The marginal revenue of capital refers to the additional revenue generated from employing one more unit of capital in the production process. It is an important concept in economics, as it helps firms determine the optimal level of capital investment. If the marginal revenue of capital exceeds the cost of using that capital, firms are incentivized to invest further; if it falls below that cost, they may reduce their capital investment. Ultimately, it helps in assessing the efficiency and profitability of capital utilization.
How do you compute marginal cost of capital?
Take the first-order derivative of the cost of capital function.
What is Decreasing return?
what is the different between diminishing marginal productivity and decreasing return to scale?
Is it possible for the marginal product of capital to be negative in an economic context?
Yes, it is possible for the marginal product of capital to be negative in an economic context. This occurs when adding more capital to the production process leads to a decrease in output, indicating inefficiency or diminishing returns.
Do fixed and variable costs affect short-run marginal cost?
Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal costs.
