Consider the Solow growth model with labour-augmenting aggregate production function, Y =F(K, AL), where Y is output, K is the capital stock, and L is the labour force. The labour force(assumed equal to population) grows at a constant rate n > 0. Technological level A grows at aconstant rate a > 0.С5.Prove analytically, that for the production function in the intensive form y = f (k)the expression for MPL =ƏYtakes the form MPL =A[f(k) – kf'(k)]. Find the growth rateof real wage w = W /P for every moment in time and on the balanced growth path.

Proof:The derivative of the production function with regard to labor is known as the marginal…

C5. Prove analytically, that for the production function in the intensive form y = f(k) ƏY the expression for MPL = takes the form MPL = A[f(k) — kf'(k)]. Find the growth rate of real wage w = W/P for every moment in time and on the balanced growth path. ƏL

C5. Prove analytically, that for the production function in the intensive form y = f(k) ƏY the expression for MPL = takes the form MPL = A[f(k) — kf'(k)]. Find the growth rate of real wage w = W/P for every moment in time and on the balanced growth path. ƏL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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