Asset retirement obligations:
1 answer:
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Answer:
the country is above the steady state
Explanation:
An economy has the per-worker production function <em>y = </em>
Here,
<em>y </em>is the output per worker and <em>k </em>is the capital-labor ratio
depreciation rate <em>d = 0.5.</em>
Population growth rate is <em>n = 0%</em>
a. At steady state
<em>Δk = 0</em>
<em>sy-k(d+n) = 0 </em>
<em>sy = k(d+n)</em>
<em>0.5 ( ) = k (0.05 + 0)</em>
<em>0.5 = 0.05k</em>
then resolve for <em>k</em>, and obtain <em>k=100. </em>The capital in steady state.
If the k=400, then the output
<em>y = </em>
<em> = </em>
<em> =20</em>
Thus, the country is above the steady state