If the per-worker production function is given by y = k1/2, the saving ratio is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

Question

Quizplus · Accepted Answer

In the steady state, output per worker (y) is constant over time, so we have:
Investment per worker = Depreciation per worker
0.2y = 0.1k1/2
Solving for k, we get:
k = 4y^2
Plugging this into the production function, we get:
y = (4y^2)1/2
y = 2
So the steady-state ratio of output per worker is 2. Therefore, the answer is B.

If the Per-Worker Production Function Is Given by Y =