Home Assignment #1: Due to September 27, 2013. Show all your calculations and explain all your answers 1. Consider 2 countries, Avataria and...
linleyHome Assignment #1: Due to September 27, 2013. Show all your calculations and explain all your answers  
1. Consider 2 countries, Avataria and Twilightia, which can be described by the Solow model. Avataria has a capitallabor ratio that is initially twice as big as that of Twilightia, but neither country is yet in a steady state. Both countries have the same production function, Y(K,L) = 4(K)1/2(L)1/2. investment rate and 12% depreciation rate. (a) Calculate the steadystate capitallabor ratio for each country. Does the initial capitallabor ratio affect your results? (b) Calculate output per worker and consumption per worker for each country. Which country has the highest output per worker? The highest consumption per worker?

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 College Algebra
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