3. Country A has a capital-labor ratio that is initially twice as big as that of country B, but neither a steady state. Both countries have the same production function: f(k) = 6k/2 Country A has a 10% saving rate, 10% population growth rate, and 5% depreciation rate, while B has a 20% saving rate, 10% population growth rate, and 20% depreciation rate. a) Calculate the steady-state capital-labor ratio for each country. Does the initial capital-la affect your results? b) Calculate output per worker and consumption per worker for each country. Which country
3. Country A has a capital-labor ratio that is initially twice as big as that of country B, but neither a steady state. Both countries have the same production function: f(k) = 6k/2 Country A has a 10% saving rate, 10% population growth rate, and 5% depreciation rate, while B has a 20% saving rate, 10% population growth rate, and 20% depreciation rate. a) Calculate the steady-state capital-labor ratio for each country. Does the initial capital-la affect your results? b) Calculate output per worker and consumption per worker for each country. Which country
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:3. Country A has a capital-labor ratio that is initially twice as big as that of country B, but neither is yet in
a steady state. Both countries have the same production function:
f(k) = 6k/2
Country A has a 10% saving rate, 10% population growth rate, and 5% depreciation rate, while country
B has a 20% saving rate, 10% population growth rate, and 20% depreciation rate.
a) Calculate the steady-state capital-labor ratio for each country. Does the initial capital-labor ratio
affect your results?
b) Calculate output per worker and consumption per worker for each country. Which country has the
highest output per worker? The highest consumption per worker?
Answer:
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