Examlex

Solved

A Firm's Output (Y)depends on How Much Capital (K)it Has,according

question 52

Essay

A firm's output (Y)depends on how much capital (K)it has,according to the equation: Y = 20K - K2.The real interest rate is 6% per year,the depreciation rate of capital is 14% per year and the price of a unit of capital is $80,and each unit of output sells for $1.
(a)For capital levels of 0 to 6,how much is output?
(b)For capital levels from 1 to 6,calculate the marginal product of capital.
(c)How many units of capital does the firm desire?
(d)If the real interest rate was 1% per year,how many units of capital would the firm desire?


Definitions:

Forward Reaction

A chemical reaction where reactants convert into products, typically highlighted in a chemistry equilibrium context.

Energy of Activation

The minimum quantity of energy that the reacting species must possess in order to undergo a specified chemical reaction.

Equilibrium Reaction

A chemical reaction where the rates of the forward and reverse reactions are equal, leading to a constant concentration of reactants and products.

Molecules

Electrically neutral groups of two or more atoms held together by chemical bonds, representing the smallest fundamental unit of a chemical compound that can take part in a chemical reaction.

Related Questions