The golden ruleconsider an economy with the following, Ask an Expert

Economics

The Golden Rule:

Consider an economy with the following production function Y = K^1/3 L^2/3

a) Write down the function of production per unit of labor.

b) Determine the steady state level of capital, income and consumption (all per unit of labor) as a function of the savings rate and the depreciation rate.

c) Suppose that the depreciation rates is 10% per year. Compute consumption per unit of labor for a savings rate of 0%, 10%, 20%, 30%, 40%, 50%, etc. What is the savings rate that maximizes consumption per unit of labor?

d) Compute the net rate of return on capital in the steady state for all the savings rates of part (c). What is the relationship between the real rate of return on capital and consumption per unit of labor?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91275884

Have any Question?Write your Review or question?

Related Questions in Business Economics

Describe the difference between discrete and continuous

Describe the difference between discrete and continuous variables. Why do we need two different statistical tests to determine if differences in proportions are statistically significant verses differences in proportions ...

An important decision places christmas holiday celebrators

An important decision places Christmas holiday celebrators: To buy real or artificial trees? A market research firm reported that 62% of individuals polled preferred an artificial tree. We conduct independent serving of ...

In the summer of 2013 walt disney released the lone ranger

In the summer of 2013, Walt Disney released The Lone Ranger, starring Johnny Depp and produced by Jerry Bruckheimer. The film bombed at the box office: Worldwide, it earned about $245 million in revenue, well below the $ ...

If the coefficient of determination is 0738 what percentage

If the coefficient of determination is 0.738, what percentage of the data about the regression line is unexplained?

A national air traffic control system handled an average of

A national air traffic control system handled an average of 47,556 flights during 28 randomly selected days in a recent year. The standard deviation for this sample is 6,251 flights per day. Complete parts a through c be ...

A real world example of a unfavorable result in an

A real world example of a unfavorable result in an experiment and what could have been done to avoid the outcome of the experiment?

1 explain the different elements of property rights provide

1. Explain the different elements of property rights. Provide an example of how the US economy infringes on each. 2. Explain why inequality is considered to be a social "bad" by many people. In what way could inequality ...

Carlies indifference curves have the equation xb

Charlie's indifference curves have the equation xB = constant/xA, where larger constants denote better indifference curves. Charlie strictly prefers the bundle (6, 16) to a. the bundle (16, 6). b. the bundle (7, 15). c. ...

Toms income is 480and he spends it on two goods x and y his

Tom's income is $480and he spends it on two goods, X and Y. His utility function is U = XY. Both X and Y sells for $8 per unit. a. Use lagrangian function to calculate Tom's utility-maximizing purchases of X and Y. b. ...

A if the required reserve ratio is 250 percent what is the

a. If the required reserve ratio is 2.50 percent, what is the monetary multiplier b. If the monetary multiplier is 5, what is the required reserve ratio?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert