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: 10% per year. The real rate of interest is: 15% per year. If the existing level of capital K, is equal to 50 units, what is the level of gross investment? 4= 5 (onter your answor rounded to one decimal place). If the real interest rate changes to 5%, what will e the new level of investment (holding the rate of depreciation, the price of capital, the amount of existing capital and MPK' constant)? = (ontor your answor rounded to one decimal place).
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: 10% per year. The real rate of interest is: 15% per year. If the existing level of capital K, is equal to 50 units, what is the level of gross investment? 4= 5 (onter your answor rounded to one decimal place). If the real interest rate changes to 5%, what will e the new level of investment (holding the rate of depreciation, the price of capital, the amount of existing capital and MPK' constant)? = (ontor your answor rounded to one decimal place).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The equation for the marginal productivity of capital is given by:
Real Interest Rate (%)
22.5-
MPK :
= 1,000 - 1OK
20.0-
The price of a unit of capital is 2,000. The rate of depreciation is: 10% per year. The real rate of interest is: 15% per year.
17.5-
If the existing level of capital K, is equal to 50 units, what is the level of gross investment?
15.0-
I4 = 5 (enter your answer rounded to one decimal place).
12.5-
If the real interest rate changes to 5%, what will be the new level of investment (holding the rate of depreciation, the price of capital, the amount of
10.0-
existing capital and
MPK
constant)?
7.5-
I'; = |(enter your answer rounded to one decimal place).
5.0-
2.5-
0.0+
0.0
10.0
20.0
30.0
40.0
50.0
Investment (units)
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