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Unformatted text preview: Econ 204 Instructor: J. Li 1 QUIZ 2 ANSWERS, SPRING 2011 Given: production function: Â¡ Â¢Â£Â¤Â¥ Â¦Â§ Â¡ Â¤ Â¨ Â¦ Â©ÂªÂ¨ (a) Find: per worker production function. f ( k ) = F ( K , L ) / L (+0.25) = K Î± L 1-Î± / L = ( K / L ) Î± = k Î± +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 Î±. Â«Â¬ Â¡ ÂÂ®Â£Â¬Â§ Â¯ Â£Â° Â± Â²Â§Â¬ +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, Î” k = 0 sf ( k ) â€“ ( Î´ + n ) k = 0. +0.25 Or Â¬ Â³ Â®Â£Â¬ Â³ Â§ Â¡ Â Â° Â± Â² +0.25 Solving for Â¬ Â³ we get: Â£Â¬ Â³ Â§ Â©ÂªÂ¨ Â¡ Â Â° Â± Â² Â´ Or Â¬ Â³ Â¡ Â£ Âµ Â¶Â·Â¸ Â§ Â¹ Â¹ÂºÂ» +0.25 Substituting k * into per-worker production function yields y *: y = k Î± Â´Â¼ Â³ Â¡ Â£ Âµ Â¶Â·Â¸ Â§ Â» Â¹ÂºÂ» +0.25 Similarly solve for c *: c = (1 â€“ s ) y * Â½ Â³ Â¡ Â£Â¾ Â¯ ÂÂ§Â£ Âµ Â¶Â·Â¸ Â§ Â» Â¹ÂºÂ» +0.25 (c) Demonstrate: The steady state solution in a diagram. Demonstrate: The steady state solution in a diagram....
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This note was uploaded on 01/27/2012 for the course ECON 204 taught by Professor Beryl li during the Spring '11 term at University of Victoria.
- Spring '11
- Beryl Li