What interest rates to charge a poor entrepreneur

Reference no: EM131915986

Problem

Recall the concept of marginal returns to capital. When the shape of the production function is "conveniently" concave, how does this concept factor into a commercial bank manager's decision about what interest rates to charge a poor entrepreneur and a rich entrepreneur? Give two plausible scenarios where the standard prediction of interest rates for rich and poor entrepreneurs doesn't apply. Based on these two examples, explain why the marginal return to capital might be high for a rich entrepreneur and low for a poor entrepreneur.

Reference no: EM131915986

Questions Cloud

In which of the two countries should entrepreneur invest : An entrepreneur has an idea for a profitable project, but she is unsure. In which of the two countries should she invest? Briefly explain your answer.

Draw a graph showing how credit markets can be ineffi cient : Draw a graph showing how credit markets can be ineffi cient when a potential borrower lacks assets that can be used as collateral to gain access to loans.

Identify the limitations of prior analysis : The challenge of this part is to look and "thematic" in other words you should not summarize once again what the article/books/data you examined said.

How you would approach organizing your employees : Explain how you would approach organizing your employees and assigning them tasks.

What interest rates to charge a poor entrepreneur : How does this concept factor into a commercial bank manager's decision about what interest rates to charge a poor entrepreneur and a rich entrepreneur?

Define why do most cities closely regulate the cab industry : Explain the significance of treating a CPNC as a "privilege" rather than as a property right. Why do most cities closely regulate the cab industry?

The level of effectiveness in law enforcement : Identify issues within the report that relate to topics covered in this course, such as leadership, decision making, organizational culture, communication.

Why investing in kenya or bolivia might seem riskier : Microfinance has spread very quickly in low-income countries. Explain why investing in Kenya or Bolivia might seem riskier than investing in her own country.

What is the maximum amount of real power transfer : What is the maximum amount of real power transfer if any three line segments are out of service? Figures from power world showing the result are needed

User Account

All Pages