Question

Q1= A firm uses capital to produce revenue. The marginal revenue from the first 5 units of capital is as follows: 1st unit has MR 1.6, 2nd unit has MR 1.42, 3rd unit has MR 1.3, 4th unit has MR 1.19, and 5th unit has MR 1.15. If the interest rate is 25%, what is the optimal amount of capital for this firm to borrow

Q3 = Say a household has a wealth endowment of $5 and can use this to either consume (C) or save (S). Savings earn interest of 28% and consumption yields marginal benefit as follows: 1st $1 has MB $1.9, 2nd $1 has MB $1.55, 3rd $1 has MB 1.3, 4th $1 has MB 1.23, and 5th $1 has MB of $1.18. To maximize the sum of earnings on savings and benefit from consumption, the household should pick.

Just this question below:

Consider the MB schedule described for the household in question 3, and the MR schedule described for the firm in question 1. If the interest rate is 35%, is this a market clearing interest rate?
( Check whether supply of funds equals demand for funds)***

- the answer to this question has already been solved, but lacked of explanation regarding the answer.

In other words, I need a step-by-step solution to this particular question (no short-cut please)

Thanks you.

Answer 1

as per HOMEWORKLIB RULES i wrote only 2 ans you can post seperately i will help