The economy has two sectors, manufacturing firms and research universities. The two sectors are described by the production functions

Y = K power 1/2 [(1-u)LE] Power 1/2

E = u E

where u is the fraction of labour force in universities (assume u is exogenous).

1. Write the equation of motion of capital, K = sY - K, in intensive form.
2. Write down the steady state condition and find the steady statelevel of capital per effective worker.