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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 per-worker 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....
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- Spring '11
- Beryl Li