The production technology of an economy is given by a. Verify that the equilibrium wage rate must…

The production technology of an economy is given by

a. Verify that the equilibrium wage rate must be and the interest rate

b. Show that capital market equilibrium in a steady state requires x₁ = [1- α]k^α – [1 + n]k.

c. Hence use the consumer’s budget constraint to show that x₂ = [1 + n]k[1 + αk^α-1].

d. Use these relationships to calculate the consumption possibility frontier. Sketch this frontier and locate the Golden Rule capital–labor ratio.