need help solving question 3 4 and 5

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David · Accepted Answer

3 (a) The slope of the break even investment line in the Solow model is given by (n+g+δ), so when the depreciation rate, δ, falls, the slope of the break-even investment also decreases.
The actual investment curve is sf(k), however remains unaffected.  As a result of the fall in depreciation rate, in the balanced-growth-path, the level of capital per unit of effective labor increases from k* to k*new
(b) Because of an increase in the level of technology, represented by g, the slope of the break even investment line (n+g+δ), increases.  Once again, the actual investment curve sf(k) is unchanged.
In this situation, the level of capital per unit of effective labor on the balanced growth path decreases from k* to k*new .
(c) An increase in the capital’s share(α) in the production function keeps the break even investment unchanged. 
The actual investment curve is represented by sf(k)= skα  .  So  after taking derivative of  skα  
With respect to  α, we have,  dskα  / dα= skα  ln k. For 01, ln k>0 implies,
 dskα  / dα >0 which means that the new actual investment curve would lie above the old one.

need help solving question 3 4 and 5

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