Question: (a) In the long run, continuing at the Solow steady state, what is the growth rate of the combined output 1'? + Y? of the

(a) In the long run, continuing at the Solow steady state, what is the growth rate of the combined output 1'? + Y? of the Avalonian and Baltian economies? (b) From this point onwards, assume that the common production function takes a Cobb- Douglas form, with F(K,AL) = K\"(AL)1\" for 0 1 after the disaster, assuming no other changes to parameters or the structure of the economy, will Avalonian capital per efficiency unit of labor in? increase, decrease, or stay the same? How about the Baltian level if? Explain your answers

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