3) There are two countries, Anihc (country A) and Bapan (country B), with the same production function f (k) = 5k0.5. However, country A has saving rates of 0.2, depreciation rate of 0.2 and population growth of 0.2; while country B has saving rates of 0.1, depreciation rate of 0.15 and population growth of 0.05. Using the Solow model: a. Find the steady state capital-labor ratio for each country. b. Find the steady state output per worker, and the steady state consumption per worker for each country. c. Which country produces the most per capita? Which country consumes the most per capita?

3) There are two countries, Anihc (country A) and Bapan (country B), with the same production function f (k) = 5k0.5. However, country A has saving rates of 0.2, depreciation rate of 0.2 and population growth of 0.2; while country B has saving rates of 0.1, depreciation rate of 0.15 and population growth of 0.05. Using the Solow model: a. Find the steady state capital-labor ratio for each country. b. Find the steady state output per worker, and the steady state consumption per worker for each country. c. Which country produces the most per capita? Which country consumes the most per capita?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

3) There are two countries, Anihc (country A) and Bapan (country B), with the same production
function f (k) = 5k0.5. However, country A has saving rates of 0.2, depreciation rate of 0.2 and
population growth of 0.2; while country B has saving rates of 0.1, depreciation rate of 0.15 and
population growth of 0.05. Using the Solow model:
a. Find the steady state capital-labor ratio for each country.
b. Find the steady state output per worker, and the steady state consumption per worker
for each country.
c. Which country produces the most per capita? Which country consumes the most per
capita?

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