Question

Suppose the growth of production in Country B follows Solow Model. Country B's production function is Y = F(K,L) = K0.5 L0.5 . Country B has 100 people(labors) and 64 units of capital K in Year 1. For Country B, what is the aggregate production in Year 1?

Answer 1

80

Step-by-step explanation:

Given the Solow Formula Y =
`K^(0.5) *L^(0.5)` in the question, we have:

Capital K = 64

Labors L = 100

Substituting the number for K and L into the equation, we have:

`Y=64^(0.5) *100^(0.5)`

Y = 8 * 10

Y = 80

Please Note:

Country B's production function is Y = F(K,L) = K0.5 L0.5 is not correctly stated as the real Solow Model using equation format in the question. This has therefore been done under the explanation above and now correctly stated as Y =
`K^(0.5) *L^(0.5)` .