(b) Time is continuous and the production function of the economy is given by Yt = At( Kt )ª( N₁ ) ¹−¤ Productivity is now given by A₁ = Y where & € (0,1) and (þ + a) < 1. Population grows at a constant rate n as in part (a). (i) What is the intuition behind A = ??? (ii) Find an expression for the growth rate of output per capita (Y₁ / N₁). When is the growth rate of output per capita equal to zero?

(b) Time is continuous and the production function of the economy is given by Yt = At( Kt )ª( N₁ ) ¹−¤ Productivity is now given by A₁ = Y where & € (0,1) and (þ + a) < 1. Population grows at a constant rate n as in part (a). (i) What is the intuition behind A = ??? (ii) Find an expression for the growth rate of output per capita (Y₁ / N₁). When is the growth rate of output per capita equal to zero?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.8P

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