Q4: Consider two countries, A and B. Both countries have the production function: Y = K.25L.75...

Q4: Consider two countries, A and B. Both countries have the production function: Y = K.25L.75 and both have population growth rates of .01 and depreciation rates of .01. In A savings is .2 and in B, savings are .4

(a) Write the production function in terms of output per worker. (b) Find the steady state level of capital per worker.

(c) Find the steady state levels of output per worker and consumption per worker.

(d) In the steady state in which country is the standard of living higher?

(e) In the steady state in which country is the MPL higher?

Expert Solution

Rahul Sunny answered 2 years ago

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