Consider the Solow-Swan growth model, with a savings rate, s, a depreciation rate,8, and a population growth rate, n. The production function is given by: Y = AK + BK¹1/2H¹/4L1/4 where A and B are positive constants. Note that this production is a mixture of Romer's AK model and the neoclassical Cobb-Douglas production function. (a) Express output per person, y =Y/L, as a function of capital per person, k =K/L. (b) Write down an expression for y/k as a function of k and graph. (Hint: as k goes to infinity, does the ratio y/k approach zero?) ●

Consider the Solow-Swan growth model, with a savings rate, s, a depreciation rate,8, and a population growth rate, n. The production function is given by: Y = AK + BK¹1/2H¹/4L1/4 where A and B are positive constants. Note that this production is a mixture of Romer's AK model and the neoclassical Cobb-Douglas production function. (a) Express output per person, y =Y/L, as a function of capital per person, k =K/L. (b) Write down an expression for y/k as a function of k and graph. (Hint: as k goes to infinity, does the ratio y/k approach zero?) ●

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

only part b solution is needed

Problem 1
Consider the Solow-Swan growth model, with a savings rate, s, a depreciation
rate,8, and a population growth rate, n. The production function is given by:
Y = AK + BK¹/2 H¹/4L¹/4
where A and B are positive constants. Note that this production is a mixture of
Romer's AK model and the neoclassical Cobb-Douglas production function.
(a) Express output per person, y =Y/L, as a function of capital per person, k =K/L.
(b) Write down an expression for y/k as a function of k and graph. (Hint: as k
goes to infinity, does the ratio y/k approach zero?)

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Step 1: Introduce the concept of Solow-Swan growth model.

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Step 2: (a)Express output per person as a function of capital per person.

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Step 3: b) Express y/k as a function of k & prepare graph

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