Consider the following Solow diagram, indicating two sep- arate savings rates, 0.2 and 0.4:   Suppose the savings rate is 0.2. At the steady state, what is capital per worker? What is output per worker? How much is saved per worker? Suppose the population growth rate is equal to the depreciation rate. Solve for n and d.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 10E
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Consider the following Solow diagram, indicating two sep-
arate savings rates, 0.2 and 0.4:

 

  1. Suppose the savings rate is 0.2. At the steady state, what is capital per worker? What is output per worker? How much is saved per worker?
  2. Suppose the population growth rate is equal to the depreciation
    rate. Solve for n and d.
(n + d)k
y = f(k)
$170
$150
$100
0.4y
0.2y
k
$500
$1, 500 $4, 250
Transcribed Image Text:(n + d)k y = f(k) $170 $150 $100 0.4y 0.2y k $500 $1, 500 $4, 250
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