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A profit-maximizing firm will invest up to the level of investment where:
The cost of borrowing equals the marginal efficiency of capital
The cost of borrowing is greater than the marginal efficiency of capital
The cost of borrowing is less than the marginal efficiency of capital
The cost of borrowing equals the marginal propensity to consume
A firm will invest if the expected return on an investment is greater than the cost of borrowing; investment will continue up to the point where the rate of return equals the costs of borrowing.
By: Jyoti Das ProfileResourcesReport error
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