Assume that a country\'s production function is Y= K12L 12 What is the per-worke

Question

Assume that a country's production function is Y= K12L 12 What is the per-worker production function y =f(k)? Assume that the country possesses 40,000 units of capital and 10,000 units of labour. What is Y? What is labour productivity computed from the per-worker production function? Is this value the same as labour productivity computed from the original production function? Assume that 10 percent of capital depreciates each year. What gross saving rate is necessary to make the given capital-labour ratio the steady-state capital-labour ratio? (Hint: In a steady state with no population growth or technological change, the saving rate multiplied by per-worker output must equal the depreciation rate multiplied by the capital-labour ratio.) If the saving rate equals the steady-state level, what is consumption per worker? a. b. c. d.

Explanation / Answer

Ans a. The per unit order is 1+1=2

b Y = 40000/10000

= 4

c. The gross capital labor ratio is 20%.

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