Question

Country A and country B both have the production function.

?=?(?,?)=?^1/2*?^1/2

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 12 percent of output each year and country B saves 24 percent of output each year. Using your answer from part bv(per worker production funtion is y=f(k) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker (?∗)(k∗), income per worker (?∗)(y∗), and consumption per worker (?∗)(c∗) for each country.

For Country A

For Country B

k∗ for Country A:

k∗ for Country B:

y∗ for Country A:

y∗ for Country B:

c∗ for Country A:

c∗ for Country B:

d. Suppose that both countries start off with a capital stock per worker of 5. What are the levels of income per worker and consumption per worker?

Round your answers to two decimal places

For Country A y= X and c= X

For Country B y= X and c= X

Answer 1