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Calculate the user cost of capital

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Question: A firm has current and future marginal productivity of capital given by MPK = 10,000 - 2K + L,and marginal productivity of labor given by MPL = 50 - 2L + K. The real price of capital is5000, 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. Show your work

(b) Find the firm's optimal amount of employment and the size of the capital stock.

 

 

 

Reference no: EM133575287

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