A competitive firm can sell any output at price 𝑃 = 1. Production depends on capital alone, and the production function 𝑦 = 𝑓(𝐾) is twice continuously differentiable, with
𝑓(0) = 0, 𝑓 ′ > 0, 𝑓 ′′ < 0, \(lim\\_{ 𝐾→0 }\) 𝑓 ′ (𝐾) = ∞ , \(lim\\_{ 𝐾→∞}\) 𝑓 ′ (𝐾) = 0.
The firm has positive capital stock 𝐾̅ to start with, and can buy and sell capital at price 𝑟 per unit of capital. If the firm is maximizing profit then which of the following statements is NOT CORRECT?