On January 1, 2026, each of Boblandia's 100 workers has $2 in physical capital. Over the course of the year, it physical capital depreciates by 8%, and the number of workers increases by 2%. How much does Boblandia have to invest in 2026 to make sure that its capital to labour ratio is the same on January 1, 2027 as it was on January 1, 2026?

On January 1, 2026, each of Boblandia's 100 workers has $2 in physical capital. Over the course of the year, it physical capital depreciates by 8%, and the number of workers increases by 2%. How much does Boblandia have to invest in 2026 to make sure that its capital to labour ratio is the same on January 1, 2027 as it was on January 1, 2026?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 8PA

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