1. The problem of the firm in the two-period model with investment is max V = 7+ {N.N',I} T 1+r where a = zkNs WN I, ' = Z'K'AN'S W'N' + (1 - d) K' and K' = (1 - d) K+I. Parameters a and 3 are both positive and sum up to less than 1, i.e. a > 0,8 >0 and (a + 3) 0,8 >0 and (a + 3)