Suppose th at a country has a produ ction function, where Lis labour, K is capital and A is total factor produ ctivity, as follows: Y = F(K, L) = AK0.25 _0.75 a) Write the produ ction function in "intensive form" (output per worker as a fun ction of capital per worker). b) Suppose, in itially, that A = 4 andits growth rate is zero. The countryhas a population growth of 1% per year (0.01) and a depreciation rate of 10% (0.10). If the county saves 30% of nation al in come, find the steady state levels of capital per worker, as well as con sumption andincome ner worker

Suppose th at a country has a produ ction function, where Lis labour, K is capital and A is total factor produ ctivity, as follows: Y = F(K, L) = AK0.25 _0.75 a) Write the produ ction function in "intensive form" (output per worker as a fun ction of capital per worker). b) Suppose, in itially, that A = 4 andits growth rate is zero. The countryhas a population growth of 1% per year (0.01) and a depreciation rate of 10% (0.10). If the county saves 30% of nation al in come, find the steady state levels of capital per worker, as well as con sumption andincome ner worker

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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