Question 1 30 points Production Model We are researching a certain country and we want to develop a baseline model to study its aggregate production. Before we begin our study, we must select the appropriate aggregate production function. The two potential functions f1 and f2 are: Y = f1(K, _) = AK3(L x h) 3 (1) Y = f2 (K, [) = A + K +(L xh) (2) We also assume that the quantity supplied of labor L, and the quantity supplied of capital K, are exogenous and constant, such that L: = I (3) K , = K (4 ) where . Y is endogenous real output . A is total factor productivity and assumed to be exogenous and greater than one . K is endogenous capital stock . L is endogenous labor stock . h = 1 is the average efficiency of labor . I and K are positive constants e. Denote the per worker capital stock by k = E. Find the equilibrium per worker output * = . [Derivation not required.] g. How would you change the graph above if A increases to 10, while everything else stays constant How would this change the production and economy? Explain your answer in a few sentences