4. Suppose that a firm begins at time t = 1 with a capital stock of K (1) = 200,000 and, in addition to replacing any depreciated capital, is planning to invest in new capital at the rate I (t) = 50,0001-3/2 for the forseeable future. Find the planned level of capital stock 7 years from now. Will this firm's capital stock grow without bound as T→ co? Explain using a graph.

4. Suppose that a firm begins at time t = 1 with a capital stock of K (1) = 200,000 and, in addition to replacing any depreciated capital, is planning to invest in new capital at the rate I (t) = 50,0001-3/2 for the forseeable future. Find the planned level of capital stock 7 years from now. Will this firm's capital stock grow without bound as T→ co? Explain using a graph.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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