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QUESTION

In the case for which the entrepreneur has sufficient funds to finance investment without borrowing, is it possible that the availability of

In the case for which the entrepreneur has sufficient funds to finance investment without borrowing, is it possible that the availability of financial markets would cause her to decrease her investment compared to the investment level she would choose if there were no investment market opportunities? If not, explain why not. If yes, illustrate the possibility with a diagram. If yes, is the increase in investment a good outcome in terms of economic efficiency?

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