Consider a closed economy, in which the aggregate production function is h = AK^0.2 H^0.3 N^0.5. Suppose that = Bk. There are also transaction costs taking the form of legal fees captured by the parameter b, which measures the per worker transaction costs of converting savings into investment. In addition, suppose that two First Nations Reserves (FNRs) have identical population size and share the following parameters: A = 4, B= 1 s= 10 %, n = 0 %, b= 30 % and d = 10 %. One of the FNRs is in the low-income steady state equilibrium, k^*L = 1, and the other FNR is in the high-income steady state equilibrium, k^*H = 9. All variables and parameters are defined as in the lecture notes.

Suppose that the federal government signs a treaty with each of the two FNRs that reduce the size of the transaction costs to b= 20 %

a) (2 pts.) Convert the aggregate production function into the per worker production function by expressing y as a function of .

b) (4 pts.) Solve for the steady state human capital per worker, , for each of the two equilibria corresponding to b= 20 %.

answer b I don't understand with steps