4. There are two countries. Country A and country B both have the production function 12

Y=F(K,L)=K3 L3

(a) Does this production function have constant returns to scale? Explain.

(b) What is the per-worker production function, y = f(k)?

(c) Assumethatneithercountryexperiencespopulationgrowthortechnologicalprogress and that 20 percent of capital depreciates each year. Assume further that country

A saves 10 percent of output each year and country 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.