Consider a country with only two industries--Industry A and Industry B. Capital can be employed in either industry, and the value of the marginal product of capital differs in the two industries. Initially, there is no tax on the use of capital. The value of the marginal product of capital in Industry A is given by VMPA=1200-10KA, where KA is the quantity of capital employed in Industry A. The value of the marginal product of capital in Industry B is given by VMPB=800-5KB, where KB is the quantity of capital employed in Industry B. There is a total of 100 units of capital available in the country. Suppose the government decides to impose a $15 per unit on capital used in Industry B only. What will be the quantity of capital employed in Industry B? [NOTE: If necessary, please round to the nearest whole number.] units of capital in Industry B?
Consider a country with only two industries--Industry A and Industry B. Capital can be employed in either industry, and the value of the marginal product of capital differs in the two industries. Initially, there is no tax on the use of capital. The value of the marginal product of capital in Industry A is given by VMPA=1200-10KA, where KA is the quantity of capital employed in Industry A. The value of the marginal product of capital in Industry B is given by VMPB=800-5KB, where KB is the quantity of capital employed in Industry B. There is a total of 100 units of capital available in the country.
Suppose the government decides to impose a $15 per unit on capital used in Industry B only. What will be the quantity of capital employed in Industry B?
[NOTE: If necessary, please round to the nearest whole number.]
units of capital in Industry B?
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