Response to the following problem:
What is the role of this model (in corporate decision making)? What are the model's underlying (4) assumptions How and why is the production possibilities curve depicted on the model?
Is it possible to draw the possibilities curve as an algebraic function? What is the significance of the ‘Separation Theorem'? How does the Fisher Model relate to the ‘nexus of contracts' idea in corporate decision-making Draw smaller Fisher diagrams to depict the following scenarios, and explain what happens.
(a) The firm has insufficient capital available to undertake all investments.
(b) More than sufficient assets are purchased.
Interest rates rise during the investment decision process.