Q-1: With the help of figure explain, that if Capital is Cheaper, then Investment becomes more attractive for an economy; then identify the Investment in such Economy by changes in Marginal Efficiency of Capital? No Diagram need...
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Answer:
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Answer:
If the supply price of a capital asset is Rs. 20,000 and its annual yield is Rs. 2000, then the marginal efficiency of this asset is 2000/20000 x 100 = 10 percent. Thus the marginal efficiency of capital is the percentage of profit expected from a given investment on a capital asset.