Explairelationship between population and income per capita

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Reference no: EM13178848

the Malthusian model to describe the situation in Twilightia. In particular, the relationship between its income per capita (y) and the growth rate of the population (Delta L) is given by equation:

Delta (Difference in) L = y - 100 L) is given.

Suppose its output is produced using labor and capital according to equation

Y = (K)^1/2(L)^1/2.

Assume K = 1, 000,000.

(a). Draw a graph with y on the horizontal axis and Delta L on the vertical axis, showing the relationshipbetween income per capita and population growth in Twilightia.

(b). Derive the relationship between population (L) and income per capita (y). (Hint: remember that y= Y/L.) Sketch this relationship on a graph with L on the vertical axis and y on the horizontal axis.

(c). Use the equations you derived to compute the steady-state values of L and Y.

Reference no: EM13178848

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