Concept explainers
A
in what manner firms and people decide if it’s worth to make investment in capital improvements.
Concept Introduction:
Capital Improvement: an addition or arrangement that improves the value of a property or replacement or upgrade that prolongs the lifespan of the asset.
A
Explanation of Solution
The firms and individuals determine if it’s worth it to invest in these resources based on these points:
The firms or individuals determine if it is worth to invest in capital improvements when the costs of additional capital are lesser than the revenue increase with the additional capital. In simple words, when the marginal returns from the capital is greater than the marginal cost of capital.
B
in what manner firms and people decide if it’s worth for new hires.
Concept Introduction:
Hiring: is defined as a practice of evaluating, finding and establishing a working relationship between new employees, contractors, interns etc
B
Explanation of Solution
For hiring additional workers, the firms and the individuals take their decisions by looking at the marginal returns of additional workers to the costs of hiring the additional workers. When the returns are greater than the costs of employing an additional worker, it would be worth hiring.
C
in what manner firms and people decide where to work.
C
Explanation of Solution
Despite this being akin to individuals and firms independently, in most cases, the location where to work and expansion is based on the conditions such as proximity to the market, the rules and regulations of a particular locality and availability of resources.
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