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Y7 5. (35 points) How does the equilibrium change due to this decrease in the depreciation rate? (a) (5 points) Show the old equilibrium before
Y7
5. (35 points) How does the equilibrium change due to this decrease in the depreciation rate? (a) (5 points) Show the old equilibrium before the decrease in the depreciation rate. (b) (10 points) Show the new equilibrium after the decrease in the depreciation rate. Clearly mark the new levels of rents, prices, construction, and steady-state stock even if the old and new levels coincide. (c) (20 points) Briefly explain the intuition behind any of the changes of the equilibrium rents (5 points), prices (5 points), levels of construction (5 points), and steady-state stock (5 points). If there are no changes, explain it intuitively as wellStep by Step Solution
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