Microeconomics: Theory and Applications with Calculus, 4e

15.2 Capital Markets and Investing

If a firm rents a durable good by the week, it faces a decision similar to the one it encounters when buying a nondurable good or service. A firm demands workers’ services (or other nondurable input) up to the point at which its current marginal cost (the wage) equals its current marginal benefit (the marginal revenue product of the workers’ services). A firm that rents a durable good, such as a truck, by the week can use the same rule to decide how many trucks to rent per week. The firm rents trucks up to the point at which the current marginal rental cost equals its current marginal benefit—the marginal revenue product of the trucks.

If a firm must buy or build a capital good rather than rent it, the firm ...