If f(k)= 6k⁰.⁵,s = 0.1,n = 0.1,and d = 0.2,what is the value of c (consumption)at equilibrium?

Question

Quizplus · Accepted Answer

To find the consumption at equilibrium, we need to set the production equal to the consumption.

Production = f(k) = 6k⁰.⁵
Consumption = c = s + (1-d) f(k)

At equilibrium, production = consumption
So, 6k⁰.⁵ = 0.1 + (1-0.2) * 6k⁰.⁵
Simplifying this equation, we get k = 10.8

Now, we can substitute k = 10.8 in the consumption equation to find c at equilibrium.
c = s + (1-d) f(k) = 0.1 + (1-0.2)*6*10.8⁰.⁵ = 10.8

Therefore, the answer is (C) 10.8.

If F(k)= 6k⁰