Assume that a country’s per-worker production is given by y = k1/2

Assume that a country’s per-worker production is given by y = k1/2

Assume that a country’s per-worker production is given by y = k1/2

Assume that a country’s per-worker production is given by y = k1/2, where y is output per-worker and k is capital per worker. Assume also that 10 percent of capital depreciates peryear (= 0.10).a. If the saving rate (s) is 0.4, find capital per worker, production per worker, andconsumption per worker in the steady state.b. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.6.c. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.8.d. Is it possible to save too much? Why?Show your work please.

 

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