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A firm has current and future marginal productivity of capital given by MPK = 10,000 - 2K + N, and m

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A firm has current and future marginal productivity of capital given by MPK = 10,000 - 2K + N, and m

A firm has current and future marginal productivity of capital given by MPK = 10,000 - 2K + N, and marginal productivity of labor given by MPN = 50 - 2N + K. The price of capital is $5,000, the real interest rate is 10%, and capital depreciates at a 15% rate. The real wage rate is $15.
(a) Calculate the user cost of capital.
(b) Find the firm's optimal amount of employment and the size of the capital stock.

Textbook

Macroeconomics

Edition: 8^th

Authors: Abel, Bernanke, Croushore

Read 202 times

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johnpaul92 Author

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8 years ago

Wow, you answered what I thought was impossible to answer, thank you!

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supaman

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8 years ago

Every little bit helps, right? Glad I solved your question

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