Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. economics
  3. an economy has a cobb-douglas production function:

An economy has a cobb-douglas production function: Y=K^(a)(LE)^(1-a) The economy has a capital share of 1/3, a...

60.1K

Verified Solution

Question

Economics

An economy has a cobb-douglas production function:

Y=K^(a)(LE)^(1-a)

The economy has a capital share of 1/3, a saving rate of 24%, adepreciation rate of 3%, and a rate of population growth of 2%, anda rate of labor-augmenting technological change of 1%. It is insteady state.

a) At what rates do total output, output per worker, and outputper effective worker grow?

b) solve for capital per effective worker, output per effectiveworker, and the marginal product of capital.

c) does the economy have more or less capital than at the GoldenRule steady state? how do you know? To achieve the golden rulesteady state, does the saving rate need to increase ordecrease?

d) suppose the change in the saving rate you described in part coccurs. during the transition to the golden rule steady state, willthe growth rate of output per worker be higher or lower than therate you derived in part a? after the economy reaches its newsteady state, will the growth rate of output per worker be higheror lower than the rate you derived in part a? explain youranswers.

Answer & Explanation Solved by verified expert
3.7 Ratings (303 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

RJ Transport Pty Ltd has a long-term contract with PKR Small Goods Pty Ltd to deliver...

Accounting
1.2K views

Prepare a written Executive Summary Report regarding any company, using the information contained in the company’s balance...

Biology
1.2K views

Why was the Berlin wall erected O To force the US to accept communism in...

Calculus
1.2K views

Evaluate the integral 2 e 1 2 z e dz x 1 sin x dx

Calculus
1.2K views

Draw the graph of the function and state the domain and

Algebra
1.2K views

find the value of f g 1 if f x 4x 3 and g x...

Accounting
1.2K views

Oakwood Company had accounts receivable of $740,000 and an...

Accounting
1.2K views

Problem 21-1A Contribution margin income statement and contribution margin ratio LO A1 The following costs...

Accounting
1.2K views

A long-term and noncancellable financing obligation that is a form of debt is called a(n):...

Accounting
1.2K views

Selected comparative financlal statements of Korbin Company follow. Problem 17-2A (Algo) Part 2 ...

Accounting
1.2K views

For CRANE Company, units to be produced are 4,100 in quarter 1 and 5,740 in...

Finance
1.2K views

Project Calloway has the following after tax cash flows: Year 0 ($750,000),...