9.1 Decision of Investment Principle to decide desired capital stock (take tax into account) MR(1-t)=MC(1-u) t is the ratio of tax on profit, u is the favorable term such as tax-cut MR=[(1-u)/(1t)]MC If u=t, tax will not influence investment * If u>, tax will encourage investment If ust, tax will hinder investment 友学经济学院
9.1 Decision of Investment ❖ Principle to decide desired capital stock （take tax into account）： If u=t，tax will not influence investment； If u>t，tax will encourage investment； If u<t，tax will hinder investment。 MR（1-t）=MC（1-u） t is the ratio of tax on profit，u is the favorable term such as tax-cut MR= [（1-u）/ （1-t）]MC
9.1 Decision of Investment o Given Yo, the decision of desired capital stock K* R K MC 友学经济学院
9.1 Decision of Investment Given Y0，the decision of desired capital stock K* R kMR MC Y0 K*