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1. (40 points) Suppose economic output Y depends only on capital K according to the equation Y = 25KK2. The marginal product of capital is

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1. (40 points) Suppose economic output Y depends only on capital K according to the equation Y = 25KK2. The marginal product of capital is W - 2K. The real interest rate is 6% per year, the depreciation rate ofrcapital 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 from 0 to 6, how much is output? b. For capital levels from 1 to 6, calculate the marginal product of capital. is there a diminishing retum to c'apital

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