With a per-worker production function y = k1/2, the steady-state capital stock per worker (k*) as a function of the saving rate (s) is given by:

Question

Quizplus · Accepted Answer

For the steady-state capital stock per worker (k*), we have: 
s = sy - δk* 
where s is the saving rate, sy is the investment per worker, and δ is the depreciation rate. 
From the production function y = k1/2, we have 
sy = δk1/2 
Then, we can substitute sy into the first equation: 
s = δk1/2 - δk* 
Rearranging and solving for k*, we get: 
k* = (s/δ)2

With a Per-Worker Production Function Y = K1/2, the Steady-State