Question 1 Suppose that the equation for the marginal productivity of capital is given by: MPK= 1,000-10K. The price of a unit of capital is 2,000. The rate of depreciation is: 2% per year. The real interest rate is: 3% per year. (MPK': future marginal product of capital) What is the user cost of capital? b. What is the desired capital stock? If the existing level of capital K, is equal to 50 units, what is the level of gross investment? a. c.

Question 1 Suppose that the equation for the marginal productivity of capital is given by: MPK= 1,000-10K. The price of a unit of capital is 2,000. The rate of depreciation is: 2% per year. The real interest rate is: 3% per year. (MPK': future marginal product of capital) What is the user cost of capital? b. What is the desired capital stock? If the existing level of capital K, is equal to 50 units, what is the level of gross investment? a. c.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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