This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Econ 204 Instructor: J. Li 1 QUIZ 2 ANSWERS, SPRING 2011 Given: production function: (a) Find: per worker production function. f ( k ) = F ( K , L ) / L (+0.25) = K L 1 / L = ( K / L ) = k +0.25 (b) Given: rate population growth = n . Find: The SS capital per worker, output per worker, and consumption per worker as a function of savings, depreciation and . +0.25 The SS value of capital per worker k * is defined as the value of k at which capital per worker is constant; that is, k = 0 sf ( k ) ( + n ) k = 0. +0.25 Or +0.25 Solving for we get: Or +0.25 Substituting k * into perworker production function yields y *: y = k +0.25 Similarly solve for c *: c = (1 s ) y * +0.25 (c) Demonstrate: The steady state solution in a diagram. Demonstrate: The steady state solution in a diagram....
View Full
Document
 Spring '11
 Beryl Li
 Macroeconomics

Click to edit the document details