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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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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Four Factors of Production: Land, Labor, Capital & Entrepreneurship
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Chapter 25 / Lesson 15
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What 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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