3 Two-Period Model with Endogenous Out- put 1. it a Suppose that the production function is given by z.F(K.. N3) = 2. JK. t/NE (1 = . 1). where 2.. is the total factor productivity K.: is the capital and N3 is the labor demand in each period. Denoting gross investment by In, interest rate by r and depreciation rate by ti, write the rms in- tertemporal prot maximization problem. . *'k a K1 is detrimental to the rm in period a o, i.e., 3+? = 1. Why wouldn't the firm simply 1 set K1 = {J to avoid reduction in g? . it a Suppose d = g, .21 = i and NE = 16. Derive K10") and I00"). 4. a\" n In item 1 the rm sets their marginal prots with respect to capital equal to {J in order to nd the prot-maximizing level of inputs. How- ever, they do not do so when solving item 3 in section 1. Why not