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In a neoclassical model without adjustment costs, firms will keep investing over and above what
is needed to maintain existing capital stock as long as:
a. The marginal return on capital remains positive;
b. The marginal value of capital is positive;
c. The marginal value of capital is greater than the price of capital;
d. The price of capital equals the marginal revenue product of capital;

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In a neoclassical model without adjustment costs, firms will keep in.pdf

  • 1. In a neoclassical model without adjustment costs, firms will keep investing over and above what is needed to maintain existing capital stock as long as: a. The marginal return on capital remains positive; b. The marginal value of capital is positive; c. The marginal value of capital is greater than the price of capital; d. The price of capital equals the marginal revenue product of capital;