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Part 1
The equation for the marginal productivity of capital is given by:
MPK = 1,000 - 10K
Part 2
The price of a unit of capital is $2,000. The rate of depreciation is 10% per year. The real rate of interest is 10% per year.
Part 3
If the existing level of capital Kt is equal to 50 units, what is the level of gross investment?