Q4 Please

4. Suppose MPK = 1000 - 2K; r = 10%,and 0 = 15%; output and capital prices are denoted P and Pk, respectively; (a) What is profit rate (profit per unit of capital equipment)? (b) Show that the firm's desired capital stock is positively related to output price relative to capital price, all else remaining the same (c) Suppose the government introduced investment incentives in lieu of a per unit rebate at the rate of T on each capital equipment purchases. Show that this incentive increases desired capital stock. 5. Compare and contrast the portfolio and transaction theories of money demand focus on their similar- ities and differences) 4. Suppose MPK = 1000 - 2K; r = 10%,and 0 = 15%; output and capital prices are denoted P and Pk, respectively; (a) What is profit rate (profit per unit of capital equipment)? (b) Show that the firm's desired capital stock is positively related to output price relative to capital price, all else remaining the same (c) Suppose the government introduced investment incentives in lieu of a per unit rebate at the rate of T on each capital equipment purchases. Show that this incentive increases desired capital stock. 5. Compare and contrast the portfolio and transaction theories of money demand focus on their similar- ities and differences)