note_5 - Econ 102 Spring 2011 TA Note for Week 5 Sangyup

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 102 Spring 2011 TA Note for Week 5 Sangyup Choi([email protected]) 1. Investment (a) The additional bene±ts of employing another unit of capital is measured by the expected future marginal product of capital (MPK f ). Why do we refer to the bene±ts as "expected future" MPK instead of "current" MPK? Since there is a lag between use and installation of capital. (b) How does an increase in the amount of capital employed a/ect MPK f ? What other factors a/ect MPK f ? How would you show this on a graph (with K on the horizontal axis and MPK f on the vertical axis)? permanent change in A is a shift variable, MPK f shows diminishing returns to scale 3. What are the determinants of the user cost of capital? Explain how an increase in these real price of capital, depreciation rate, and real interest rate. If these variable increase then user cost shifts up. 4. Consider a ±rm which faces the following expected future MPK: MPK
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/23/2011 for the course ECON 102 taught by Professor Serra during the Spring '08 term at UCLA.

Page1 / 2

note_5 - Econ 102 Spring 2011 TA Note for Week 5 Sangyup

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online