Consider the following production function: Y = K.5(AN).5, where both the population and the pool of...

Consider the following production function:

Y = K.5(AN).5,

where both the population and the pool of labor are growing at a rate n = .07, the capital stock is depreciating at a rate d = .03, and A is normalized to 1.

a. What are capital’s and labor’s shares of income?

b. What is the form of this production function?

c. Find the steady-state values of k and y when s = .20.

d. (i) At what rate is per capita output growing at the steady state?

(ii) At what rate is total output growing?

(iii) What if total factor productivity is increasing at a rate of 2 percent per year (g = .02)?

Expert Solution

here we solved the answer according to the given requirements like capital, labor etc...

Rahul Sunny answered 2 years ago

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