An economy has the following Cobb-Douglas production function: Y = Ka(LE)1-a The economy has a capital...

An economy has the following Cobb-Douglas production function:

Y = K^a(LE)^1-a

The economy has a capital share of 1/3, a saving rate of 24 percent, a depreciation rate of 3 percent, a rate of population growth of 2 percent, and a rate of labor-augmenting technological change of 1 percent. It is in steady state.

a. What is the steady-state growth rate in total output?

b. What is the steady-state growth rate in output per worker?

c. What is the steady-state growth rate in output per effective worker?

d. Solve for capital per effective worker.

e. Solve for output per effective worker.

f. Solve for the marginal product of capital.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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