How many years will it be before the consumption

Assignment Help Econometrics

Reference no: EM13190057

Country A and country B both have the production function: Y=f(K,L)=K^(1/2)L^(1/2)
a. Does this production function have constant returns to scale? Explain.
b. What is the per-worker production function, y = f(k)?
c. Assume that neither country experiences population growth or technological progress and that 5 percent of capital depreciates each year. Assume further that country A saves 10 percent of output each year and country B saves 20 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.
d. Suppose that both countries start off with a capital stock per worker of 2. What are the levels of income per worker and consumption per worker? Remembering that the change in the capital stock is investment less depreciation, use a calculator or a computer spreadsheet to show how the capital stock per worker will evolve over time in both countries. For each year, calculate income per worker and consumption per worker. How many years will it be before the consumption in country B is higher than the consumption in country A?

Reference no: EM13190057

Questions Cloud

What is the trial form for the particular solution : What is the trial form for the particular solution of y''+9y=2sin(3x)-1? State the trial form only. you don't need to solve it.

Define the density of the hydrogen peroxide solution : The density of the hydrogen peroxide solution is 1.01 g/ml and the solution contains 3.40% H2O2 by mass. The vapor pressure of water at 24 celsius is 22mmHg. Based on this data and information calculate the molar volume at STP.

What are both speeds : a train travels 190km in the same time a plane travels 665km.if the speed of the plane is 40km per hour less than 4 times the speed of the train, what are both speeds?

Which scale will allow her to make the tallest model : A building is 410 feet tall. For a class project, Kari is to make a scale model of the building to place in the front hall display case. The display case is 23 inches tall. Which scale will allow her to make the tallest model that will fit in the ..

How many years will it be before the consumption : Remembering that the change in the capital stock is investment less depreciation, use a calculator or a computer spreadsheet to show how the capital stock per worker will evolve over time in both countries. calculate income per worker and consumpti..

Define ph of a benzioc acid-benzoate buffer : What is the [H30+] and the pH of a benzioc acid-benzoate buffer that consists of 0.17 M C6H5COOH and 0.26 M C6H5COONa? (Ka of benzoic acid = 6.3*10^-5)

Example on substitution model : Use the substitution model to illustrate what the result of calling (add1-iter '(1 2 3)) will be. Why is the list reversed?

What is the current organizational culture : What is the current organizational culture (look to the artifacts, norms, values, and basic assumptions)? Using either the behavioral, competing values, or deep assumptions model, briefly assess the current organizational culture of this organization..

Are your personal rights protected by the constitution : Are your personal rights protected by the Constitution? Support your arguments by sound logic and real examples.

User Account

All Pages