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.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 11SCQ: Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect...

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