Suppose an economy has the following per-worker production function:
y = f(k) = 2 k1/2
The saving rate is s = .30 = 30%; the depreciation rate is d= .10 =10%.
There is no population growth.
The initial capital-labor ratio is k = 25.
What is the consumption in the initial period? What is the change in the capital-labor ratio in the initial period?