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

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

A Firm Has Current and Future Marginal Productivity of Capital