-The First Table Above Gives the Labor Demand and Labor

question 71

Essay

$$\begin{array} { | l | l | l | } \hline \begin{array} { c } \text { Real wage rate } \\\text { (2005 dollars) }\end{array} & \begin{array} { l } \text { Labor demand } \\\text { (billions of } \\\text { hours per year) }\end{array} & \begin{array} { l } \text { Labor supply } \\\text { (billions of } \\\text { hours per year) }\end{array} \\\hline 30 & 100 & 700 \\\hline 25 & 200 & 600 \\\hline 20 & 300 & 500 \\\hline 15 & 400 & 400 \\\hline 10 & 500 & 300 \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline \text { Employment } & \text { Real GDF } \\\text { (billions of } & \text { (trillions of } \\\text { hours peryear) } & 2005 \text { dollars) }\\\hline 200 & 3.0 \\\hline 300 & 4.0 \\\hline 400 & 4.8 \\\hline 500 & 5.4 \\\hline 600 & 5.8 \\\hline\end{array}$
-The first table above gives the labor demand and labor supply schedules for a nation. The second table gives its production function.
a) What is the equilibrium real wage rate and the level of employment?
b) What is potential GDP?