Suppose that the net investment flow is described by the equation I(t) = 3t/2 and thatthe initial capital stock, at time t= 0, is K(0). What is the time path of capital K?If net investment is a constant flow at I(t) = 1000 (Ghana Cedis per year), what will bethe total net investment (capital formation) during a year, from t= 0 to t= 1?If I(t) = 3t/2 (thousands of Ghana Cedis per year) – a nonconstant flow – what will bethe capital formation during the time interval [1, 4], that is, during the second, third, andfourth years?i) Show that the Cobb-Douglas productionQ=AK*L-awhere Q is total output, Kis capital stock, Lis labour stock and A and a are positivestants, exhibit constant returns to scale.ii) What returns to scale does Q=5K025 L06 exhibit?

Given: Rate of investment I(t)=3 t1/2

Answered: Suppose that the net investment flow is…

Suppose that the net investment flow is described by the equation I(t) = 3t/2 and that %3D the initial capital stock, at time t = 0, is K(0). What is the time path of capital K?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 2E

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