1. When a firm needs to buy new equipment or build a new facility, it often must go to the ________________ to raise funds.

a. forex market

b. product market

c. financial market

Booster class

Microeconomics

Skill

Understanding How Businesses Raise Financial Capital

answer

watching

178

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Raushan RajLv8

2 Nov 2020

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

When demand for a firm's product increases, the firm can take a number of steps to increase quantities supplied to the market. Some are listed below. Rank them by how quickly the firm can implement them. Explain your ranking. Which actions are short run and which are long run?
a. Begin a second product shift by hiring more workers.
b. Build a second production line in the existing plant.
c. Buy more materials and increase the rate of production per day.
d. Deplete product inventories.
e. Build a second manufacturing plan.

pucecat546

10. Consider a market with two firms, one incumbent and one potential entrant. They each produce an identical good. The entrant has a marginal cost of $5 per unit, while the incumbent has a marginal cost of $2. The demand curve for the market is given by

P= Q - 100

In order to enter the market, the potential entrant must build a factory at a cost of $F.

a) If the market is based on a Cournot equilibrium, for what values of F (if any) will the new firm enter the market?

b) If the market is based on a Bertrand equilibrium, for what values of F (if any) will the new firm enter the market?

c) How would your answers change if the incumbent had a marginal cost of $1 per unit?

So suppose we plan to build a new facility or buy new equipment both of which will produce future income over the next 25 years. Should we lock up today's cash in an asset, or should we borrow the money and let the future cash flows pay off the use of the building and equipment? Along the same lines, if the government uses debt to invest in programs or infrastructure that will increase productivity, why would they pay out of today's cash when they can let the program or infrastructure's cash flows from the future gains in productivity pay for the investment?