Question: need help with these questions with explanations if possible 1...
Need help with these questions. With explanations if possible!
1. Let the production function for an economy by given by Y=AK1/2L1/2 where Y is output, K is capital, L is labor and A is “ideas.”
a. If L=25, A=10, the savings rate is ¼ and the depreciation rate is ½, what will the steady-state values of output, capital and consumption be?
b. On a graph, show what will happen to steady-state output and capital of there is a decrease in the depreciation rate.
2. As capital increases, the marginal product of capital _________________________.
3. Country X and Country Y have identical population, institutions, and technology but country X has more physical capital. Which country will have a higher level of output and which will have a higher rate of growth?