FACTORS WHICH INFLUENCE MARGINAL EFFICIENCY OF CAPITAL OR PROFIT EXPECTATIONS

by • 02/07/2011 • B.COM PART 1 EconomicsComments (1)1007

1. Rate Of Interest:

Rate of interest is most important factor for affecting MEC because interest is cost of production, if interest rate increases, cost of production increases, hence profit margin reduces, therefore investment reduces and vice versa.

2. Non- Economic Factors:

Political events such as threat of war, elections and global political rivalries effect business prosperity hence profit margins also changes.

3. Risk Takings:

In many cases investment is undertaken on the basis of ad-hoc decisions of risky entrepreneurs. In such a situation exact calculations of profit are not possible.

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One Response to FACTORS WHICH INFLUENCE MARGINAL EFFICIENCY OF CAPITAL OR PROFIT EXPECTATIONS

  1. asad says:

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