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How was the formula i have highlighted derived, please explain In order to make this analysis more concrete, let us try to find explicit solu-

How was the formula i have highlighted derived, please explain

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In order to make this analysis more concrete, let us try to find explicit solu- tions for the long-run levels of capital and GDP. Again, we use the Cobb-Douglas production function, F (K, EN) = K" (EN)' " which gives us K C-1 MPK =aK-' (EN)1- = 0 = ak-1 EN We substitute into the profit maximization condition for optimal choice of capital stock MPK / (1 + p) - 8=7, aka-1 =r+8, 1 + /

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