What is the steady state level of capital

Reference no: EM132142145

Question: An economy is characterized by the production functionY = A (K^a ) (L^(1-a) ). The capital share of output is 50%, the depreciation rate is 10%, the investment rate is 10%, the technology constant is 6 and the labor force is 36.

So: Y = A (K^a ) (L^(1-a) ) simplifies to Y = 36K^0.5 and I = 3.6K^0.5 (Remember that X^0.5 = X^½ = vX)

What is the steady state level of capital? Show your work.

Reference no: EM132142145

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