Consider an economy with no population growth and no technological progress described by the production
function Y=K^0.3L^0.7 , where Y is output, K is capital stock and L is labour.
Assume that 30 per cent of output is saved (s=0.3), 10 per cent of the capital stock depreciates every year
(δ=0.10), and the economy starts off with 2 units of k in year 1 where k=K/L.
(A) Find the level of k at the beginning of year 2.
(B) Find the steady state of level of capital per worker ( k*), the steady state level of output per worker
(y*) and the steady state level of consumption per worker (c*).
Any help would be greatly appreciated.