Suppose that you are provided with the following information about Country Hungry:
real interest rate. 1%
population growth rate. 2%
• P = Pk = 1, and the profit function is as follows:
Π = Y − rK − wN − δ K • Assume Cobb-Douglas framework and g = 0.
• Question: Do you expect to see a pareto improvement? Why or why not?
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