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1. In the Malthusian model, let the production function be y = 10-.1L, or y = 10-(1/10)L, the death rate schedule be 60-10y, and the birth rate be 40 per thousand. Draw the production function (y on the horizontal axis and L on the vertical axis), and put numbers on the axes. Draw the death rate function (y on the horizontal axis and death rate per thousand on the vertical axis). Also draw the Rate of Natural Increase (RNI) function and put it below the production function.
a. What is the equilibrium income (y*)?________ Show your calculations.
b. What is the equilibrium level of population (L*)? __________ Show your calculations.
c. If the population is currently at 70, is the economy in equilibrium? ______. If not, will the population rise or fall?_________. Will per capita income rise or fall?
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