Question 2 Assume the following production and profit functions: Production functions in periods 1 and 2: y1 = Alkin, a 92 = Azkin,- Profit functions in periods 1 and 2 m = y1 - win1 - 1 72 = 12 - W0212 - 12 Where r denotes investment. Investment adds to the capital stock as follows: k2 = (1 - 6)ki + $1 ka = (1 - 6)k2 + 12 where o is the depreciation rate of capital. The maximisation problem looks as follows: L = m+ Bx2 + Al ((1 - 8)ki + 21 - k2)) + BA2 ((1 - 6)k2 + 22 -k3) where B is the discount rate and defined as 1/(1 + r) where r is the real interest rate