2.Consider a planet in which population grows at the constant rate nand people save a constant fraction sof their per capita output. Output is produced by environmental capital k, which depreciates at a constant d. Gross investment is used only to improve environmental capital, and y= f(k) so that output depends on environmental capital and there are diminishing returns to environmental capital.

1. Illustrate the above information in a diagram.
2. What happens to gross investment per person?
3. Suppose the rate of environmental depreciation rises. What happens to the steady state level of output per person y?
4. Is it true that if recycling were to reduce environmental depreciation, it would raise output per person in the long run?