In the two-period model of investment the production function is given by Q=9K(2/3) . The initial capital
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Question:
In the two-period model of investment the production function is given by Q=9K(2/3) . The initial capital stock is K1=110. The interest rate is 20%.
a) What is the optimal amount of investment if capital depreciates 100 percent per year?
b) How would your answer to a) change if capital depreciated by 10 percent per year?
Related Book For
Managerial Economics
ISBN: 978-1118808948
8th edition
Authors: William F. Samuelson, Stephen G. Marks
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