1. The problem of the firm in the two-period model with investment is max V =T+ {N.N.1) 1+1 where T = 2KN WN -1, n = z'K" - W'N' + (1 - d) K' and K' = (1 - d) K+I. Parameters a and 8 are both positive and sum up to less than 1, i.e. a > 0,8 >0 and (a +B) 0,8 >0 and (a +B)