Country a and country b both have the production function y 5 f(k, l) 5 k1/3l2/3.
a. does this production function have constant returns to scale? explain.
b. what is the per-worker production function, y 5 f (k)?
c. assume that neither country experiences population growth or technological progress and that 20 percent of capital depreciates each year.
assume further that country a saves 10 percent of output each year and country b saves 30 percent of output each year. using your answer from part (b) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker for each country.
then find the steady-state levels of income per worker and consumption per worker.
d. suppose that both countries start off with a capital stock per worker of 1. what are the levels of income per worker and consumption per worker?
e. remembering that the change in the capital stock is investment less depreciation, use a calculator (or, better yet, a computer spreadsheet) to show how the capital stock per worker will evolve over time in both countries. for each year, calculate income per worker and consumption per worker. how many years will it be before the consumption in country b is higher than the consumption in country a?

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The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

Which maxim is being neglected in the following conversation? eli: how did you do at the track meet? caleb: i came in second place! eli: congratulations! what was your time? caleb: six minutes, four seconds. the guy who won only beat me by three seconds. eli: really? katie said the winning time was under 6 minutes. caleb: oh, well, he might have beat me by five seconds. a)maxim of quantity b)maxim of quality c)maxim of relevance d)maxim of manner