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Consider the Chapter 11 two-period model with investment. Let the production functions for today and tomorrow be Cobb-Douglas with capital income share a = 0.26.

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Consider the Chapter 11 two-period model with investment. Let the production functions for today and tomorrow be Cobb-Douglas with capital income share a = 0.26. Let productivity levels today and tomorrow be: 2 = 7 and z' = 15, respectively. Let the net interest rate be r = 7 percent and let the annual depreciation rate be d = 5 percent. Which one of the equations below is the rm's optimality condition for capital? OA

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