Determine an economy described by the production function: Y=F(K,L)= K3/10 L7/10.
1. Determine the per worker production function?
2. assuming no population growth or the technological progress, identify the steady state capital output per worker, stock per worker, and the consumption per worker as a function of the savings rate and the depreciation rate.
3. Suppose the depreciation rate is 10%. Create a table showing the steady state capital per worker, consumption per worker or the output per worker for savings rates of 0%, 10%, 20%, 30%....all the way to 100%. Explain the savings rate maximizes output per worker? What savings rate maximizes consumption per worker?