If the per-worker production function is given by y = k1/2, the saving rate (s) is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:

Question

Arias

Mathematics

25 November, 09:16

If the per-worker production function is given by y = k1/2, the saving rate (s) is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:

+2

Answers (1)

Know the Answer?

Meyers · Answer 1

Step-by-step explanation:

Condition that must be fullfiled:

i = (n+g+k) k

k - capital per labor, n - labor growth, g - technological growth

0.2k^ (1/2) = (0+0+0.1) k

0.2k^ (1/2) = 0.1k

k^ (1-1/2) = 0.2/0.1

k^ (1/2) = 2

k = 4