If a Firm Can Borrow or Lend at a 10

Multiple Choice

If a firm can borrow or lend at a 10 percent annual interest rate, it will

A) buy all units of capital with a marginal rate of return above 10 percent
B) buy all units of capital with an average rate of return above 10 percent
C) buy all units of capital with a marginal rate of return below 10 percent
D) buy all units of capital with an average rate of return below 10 percent
E) select only the unit of capital with the highest marginal rate of return, assuming it is above 10 percent