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Question: assume we can use the malthusian model to describe the...

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Assume we can use the Malthusian model to describe the situation in Avataria. In particular, the relationship between its income per capita (y) and the growth rate of the population (ΔL) is given by equation: ΔL = y – 10

Suppose its output is produced using labor and capital according to the equation:  Y = 5*(K)^1/2(L)^1/2.

Assume K = 100

1. (8 points). Assume we can use the Malthusian model to describe the situation in Avataria. In (AL) is given by equation AL-y-10. Suppose its output is produced using labor and capital according to equation Assume K- 100. a. Draw a graph with y on the horizontal axis and AL on the vertical axis, showing the relationship between income per capita and population growth in Avataria. b. Derive the relationship between population (L) and income per capita (y). (Hint: remember that y= Y/L) Sketch this relationship on a graph with L on the vertical axis and y on the horizontal axis c. Use the equations you derived to compute the steady-state values of L and y d. Suppose that due to fertility control policies, the population growth declines so that its new relationship with the income per capita becomes AL-y-25. Calculate new values of the steady state values of L and y

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