Money is a financial asset. The leverage ratio is the ratio of debt to equity on a firm s balance sheet. The higher the ratio, the more severe the borrowing constraint. Demand for real assets can change if there is a change in household disposable income, household wealth or net worth, the yield or return on real assets, and the market interest rate on financial assets. Producing a a higher point would cause marginal cost to be greater than marginal revenue.
Most college students do face borrowing constraints.
Since college students usually don t make that much money nor do they own real or financial assets, it is hard for them to seem credit worthy. Interest rates play a big part in whether or not someone will purchase a new car. If both interest rates and my income is going up, my decision to buy a new car will be based on how much I need the car and by how much interest rates are increasing. Purchases of nondurable goods don t show up on a balance sheet because nondurable goods are a form of temporary assets. After using up any nondurable good, it ceases to be an asset.