Question: Deterministic capacity expansion with infinite horizon: Replicate Figure 3 by changing the follow- ing parameters (a and b are independent): a) f(x) = x0.2.

Deterministic capacity expansion with infinite horizon: Replicate Figure 3 by changing the

Deterministic capacity expansion with infinite horizon: Replicate Figure 3 by changing the follow- ing parameters (a and b are independent): a) f(x) = x0.2. b) r=20%. Discuss how x* changes in each case. Intuitively explain if you expected these changes, why?

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