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(Solved): Consider an economy described bythe production function: Y F(K, L) K 0.4L0.6.a. What is the per-wo ...



Consider an economy described bythe production function: Y F(K, L) K 0.4L0.6.a. What is the per-worker production function?b. Assuming no population growth or techno-logical progress, find the steady-state capitalstock per worker, output per worker, andconsumption per worker as a function of thesaving rate and the depreciation rate.c. Assume that the depreciation rate is 15 per-cent per year. Make a table showing steady-state capital per worker, output per worker,and consumption per worker for saving ratesof 0 percent, 10 percent, 20 percent, 30 per-cent, and so on. (You might find it easiest touse a computer spreadsheet.) What saving ratemaximizes output per worker? What savingrate maximizes consumption per worker?



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