Question: 5. Consider the following q problem in continuous time: V(K)= max). J(A R(KJ)- 1- 4x*)dt subject to OR = 1,, K, is given. Here r


5. Consider the following q problem in continuous time: V(K)= max). J""(A R(KJ)- 1- 4x*)dt subject to OR = 1,, K, is given. Here r is the interest rate. Note that in the problem just stated the capital stock cannot be adjusted instantaneously without incurring prohibitive adjustment costs. More precisely, if , is the amount of capital invested (or dis-invested), then the total cost of investment is given by 1, + 1 #, where X is a
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