Question: Consider a dynamic representative firm's problem. This representative firm is given K unit of capital to produce in the current period. Firm can choose (current-period

Consider a dynamic representative firm's problem. This representative firm is given K unit of capital to produce in the current period. Firm can choose (current-period and futureperiod) labor demands and investment (to adjust future-period's capital stock) to maximize its present-value lifetime profit. Given that the market interest rate is r and the capital depreciation rate is after production in each period. Let's further assume that this firm sells all the capital after future-period production.

Write down the optimal condition on investment. Intuitively explain the optimal condition.

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