Question: Problem 1A {4 points} According to the new classical investment model we have: MPK = %{r + a) (1) i. Derive the above equation and

$Problem 1A {4\" points} According to the new classical investment model$

Problem 1A {4\" points} According to the new classical investment model we have: MPK = %{r + a) (1) i. Derive the above equation and explain it briey. ii. Suppose that a firm has a production function of Y = AK-5L as where Y is output, A is productivity (or technology}, K is capital and L is labour. When A = 2, K = 1'30 and L = M0. Obtain the marginal product of capital (MIPK). iii. Consider a production function that Y = AKELE, where A = 0.1. L = 1, Pl: =1, P = l, r = 0.1, and 5:0.1. What is the optimal level of capital, K\

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