Homework 2

The model you should work with is stored in the shared folder in the class folder on casfs1 and is called "homework 2 model.stm". Or alternatively recreate what we did in class on Tuesday 9/16 and Thursday 9/12.

1. Open the model and make the necessary adjustments such that:
1. capital is used in the production of food, with a food output elasticity of capital equal to 0.2.
2. capital is used in the production of capital – with a time-lag of 4.

                                                     i.     The capital output elasticity on capital is assumed to be 0.1.

2. Identify for a lag of 4 the optimal split of workers between the manufacturing of capital and food production.

Optimal criteria.

A) Maximum number of people and food production sustained after 160 years at a level higher then the initial level of population.

B) Maximum level of capital production at the end of the simulation period.

Remember to add units everywhere into the model, in particular for the constants within the two production functions.