What is the per-worker production function

Reference no: EM132471577

Consider an economy described by the production function Y = K 0.3L 0.7

Part (1): What is the per-worker production function?

Part (2): Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker.

Part (3): Assume that the depreciation rate is 10 percent per year. Make a table showing steady-state capital per worker, output per worker, consumption per worker, and marginal product of capital net of depreciation for saving rates of 0 percent, 10 percent, 20 percent, 30 percent, and so on. Round your answers to 4 decimal places.

Part (4): Based on your results from Part (3), what saving rate maximizes consumption per worker? Under what circumstance(s) would your answer (based on the results from Part (3)) for the optimal saving rate match with the capital share of income? Why or why not?

Reference no: EM132471577

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