Consider an economy described by the production function: Y=F(K,L)=K ^(.4) L^(.6)
a. What is the per-worker production function?
b. Assuming no population growth or technological progress, find the steady state capital stock per worker, output per worker, and consumption per worker as a function of the savings rate and depreciation rate
c. Assume that the depreciation rate is 15 percent per year. Make a table showing steady state capital per worker, output per worker, and consumption per worker for savings rates of 0, 10, 20, 30, and so on up to 100. What savings rate maximizes output per worker? What savings rate maximizes consumption per worker?