Question: Can we save too much? Consumption is equal to output minus investment: c = (1 - s)y. In the context of the Solow model with

Can we save too much? Consumption is equal to output minus investment: c = (1 - s)y. In the context of the Solow model with no technological progress, what is the savings rate that maximizes steady-state consumption per worker? What is the marginal product of capital in this steady state? Show this point in a Solow diagram. Be sure to draw the production function on the diagram, and show consumption and saving and a line indicating the marginal product of capital. Can we save too much?

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