# Assume that production is a function of capital and labor, and that the rate of savings and...

## Question:

Assume that production is a function of capital and labor, and that the rate of savings and depreciation are constant. Furthermore, assume that the production function can be described by the function:

{eq}Y = K^\frac{1}{2}L^\frac{1}{2} {/eq}

where {eq}\textbf{K} {/eq} is capital and {eq}\textbf{L} {/eq} is labor.

a. What is the per worker production function y = f(k)?

b. Solve for steady state capital per worker, production per worker, and consumption per worker with s = 0.4 and {eq}\sigma {/eq} = 0.1. (You need to set {eq}\Delta k = 0 {/eq} to get an equation in s, {eq}\sigma {/eq}, and k, then solve for k).

## Capital:

Capital refers to a sum of money that investors use to set up a business. Capital is. in most cases, used to build wealth. The term is often used to describe machinery, land, and buildings that are needed to make establishments even more efficient.

## Answer and Explanation: 1

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View this answer**(A)**

The production function is: {eq}Y = K^{\frac{-1}{2}} {/eq}

Once you divide both sides by L, you will get the production function for workers to...

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Chapter 25 / Lesson 15What are the 4 factors of production? Learn about the factors of production, how land, labor, capital and entrepreneurship impact the economy, and examples.

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