Following the report you have prepared for the Treasury, one of the comments you received is that you are not allowing technology to growth over time, so you have decided to prepare a new report allowing for that possibility. You can assume that the growth level of technology is g> 0, and continue making the same assumptions on population growth you made before. When these assumptions are made, the capital accumulation equation (in per effective labour terms) assumes the following format: Ak₂ = sy₁ −(n+g+ó)k, where s is the savings rate and 6 is the capital depreciation rate. ke = K₁/(A.Lt) and yt = Y₁/(A+Lt). In your report you need to answer the following questions: 1. Find the steady-state level of income per capita assuming the production function follows the standard Cobb- Douglas production function. Show your work, step-by-step.

Following the report you have prepared for the Treasury, one of the comments you received is that you are not allowing technology to growth over time, so you have decided to prepare a new report allowing for that possibility. You can assume that the growth level of technology is g> 0, and continue making the same assumptions on population growth you made before. When these assumptions are made, the capital accumulation equation (in per effective labour terms) assumes the following format: Ak₂ = sy₁ −(n+g+ó)k, where s is the savings rate and 6 is the capital depreciation rate. ke = K₁/(A.Lt) and yt = Y₁/(A+Lt). In your report you need to answer the following questions: 1. Find the steady-state level of income per capita assuming the production function follows the standard Cobb- Douglas production function. Show your work, step-by-step.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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