Consider a simplified version of the Solow Growth Model. Assume per capita output is given by q=Ak^(αlpha). Assume δ = 0.2, s = 0.5, and αlpha = 0.5.
a) If A=10, what is the "steady state" level of capital per worker? Solve for this mathematically. (Assume A is not changing.)
b) If A=10, what is the "steady state" level output per worker? Solve for this mathematically. (Assume A is not changing.)
c) If A suddenly rises to 20 but remains fixed afterwards, what is the new "steady state" level of capital per worker?
d) If A suddenly rises to 20 but remains fixed afterwards, what is the new "steady state" level of output per worker?
e) What share of the rise in output per worker between (5/6) and (7/8) is due to technical change? Give an answer between 0 and 100 (percent). Do not include "%" or "percent."
f) What share of the rise in output per worker between (5/6) and (7/8) is due to increases in capital? Give an answer between 0 and 100 (percent). Do not include "%" or "percent."