A One-product Dynamic Model with Instantaneous Transformation of Capital

1. >u>The problem>/u>. We will consider an economic system in which one product is produced, a part being used for consumption and a part being used to increase basic capital and circulating capital. Let >i>T (t)>/i> be the labor supply available at time >i>t>/i> (we will consider this function to be given), and let >i>K (t)>/i> be basic capital at time >i>t>/i> (an unknown function). The possible production processes will be characterized by a function >i>U (K, T)>/i> giving net output created by labor >i>T>/i> using basic capital >i>K>/i> per unit of time.