Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. Country A and country B both have the production functions: Y = F(K, L) = K1/3 12/3 a. Does this production function have constant
3. Country A and country B both have the production functions: Y = F(K, L) = K1/3 12/3 a. Does this production function have constant returns to scale? b. What is the per-worker production function, y = f (k)? c. Assume that neither country experiences population growth or technological progress and that 20 percent of capital depreciates each year. Assume further that country A saves 10 percent of output each year and country c. B saves 30 percent of output each year. Using your answer from part (b) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker for each country. Then find the steady-state levels of income per worker and consumption per worker
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started