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- When does the optimal investment schedule shift?Which of the following situations represents investment? Saving? ExplainYour family takes out a mortgage and buys a new house. You use your paycheque to buy stock in Sagicor Financial Services.Which of the following reasons could cause the demand curve for loanable funds to shift to the right from DLF to D¹LF in the figure? Wage $11 8 X 3400 2700 D 4500 Quantity of labor The economy is expected to boom, thereby increasing investment returns. O Larger investment projects with potentially higher returns get funded. Falling interest rates make it less expensive for firms to borrow. Rising interest rates make it more attractive for savers to save.
- How is optimal investment for the firm affected by an increase in the current capital stock? A. The demand for investment goods will increase along the optimal investment schedule. B. The optimal investment schedule shifts to the right. For each level of investment, the future marginal product of capital will increase. C. The demand for investment goods will decrease along the optimal investment schedule. D. The optimal investment schedule shifts to the left. For each level of investment, the future marginal product of capital will decrease.ADVANCED ANALYSIS A firm faces the following costs: total cost of capital = $1,000; price paid for labor = $12 per labor unit; and price paid for raw materials = $4 per raw-material unit. %3D Instructions: In parts a and b, enter your answers for total cost as a whole number. Round your answers for average total cost to 2 decimal places. In part c, enter your answer as a whole number. a. Suppose the firm can produce 5,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5,000 units of output? TC = $ %D ATC = $ b. Now assume the firm improves its production process so that it can produce 6,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,000 units of output? TC = $ ATC = $ c. If units of output can always be sold for $1 each,…Explain the three main important properties of the saving function?