Suppose that Toyota buys a factory previous owned by Chrysler Motors. Economists would: A. consider this to be an economic investment. B. not consider this to be an economic investment because Toyota is less efficient than Chrysler. C. not consider this to be an economic investment because no new capital is created through the purchase. D. not consider this to be an economic investment because there is no way to know how it will affect stock holdings in the two companies.

Not consider this to be an economic investment because no new capital is created through the purchase (C)

Explanation:

Toyota buying a factory previously owned by Chrysler Motors would not be considered as an economic investment by economists because no new capital is created through the purchase of the company (Chrysler).

An economic investment is an investment that bring additions to the capital stock of a company in the form of Machinery or a new production facility that is to be used to manufacture more products to get higher profits. the buying of the factory by Toyota adds no new form of Machinery to the company.

The correct option is C, not consider this to be an economic investment because no new capital is created through the purchase

Explanation:

An economic investment is the one that adds considerable value to the existing business capacity such as acquiring a new factory that can manufacture cars which cuts down production time by 5 hours per car.

There is no doubt that the acquisition of Chrysler factory involves capital outlay but the issue lies in its value-adding potentials which is capable of increasing profitability thereby driving higher margins.

Efficiency is key nowadays to increasing firm's margins, hence a capital or economic investment cannot said to be worthwhile