Question

Consider the following production function:   5. 5.  ALKY , where Y is total quantity of output, A is a measure of technology or productivity, and L is total number of workers. Both the population and the pool of labor are growing at a rate n = 0.07, the capital stock is depreciating at a rate d = 0.03, and A is normalized to 1. a. Show the production function satisfies the assumption of constant returns to scale. b. Show the production function satisfies the assumption of diminishing marginal product of capital. c. Express the production function in per-worker terms. d. Find the steady-state values of k and y when investment rate, γ =.20.

          Consider the following production function:   5. 5.  ALKY , where Y is total quantity of output, A is a measure of technology or productivity, and L is total number of workers. Both the population and the pool of labor are growing at a rate n = 0.07, the capital stock is depreciating at a rate d = 0.03, and A is normalized to 1. a. Show the production function satisfies the assumption of constant returns to scale. b. Show the production function satisfies the assumption of diminishing marginal product of capital. c. Express the production function in per-worker terms. d. Find the steady-state values of k and y when investment rate, γ =.20.

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