Suppose That a Hypothetical Economy Has the Following Relationship Between

question 16

Essay

Suppose that a hypothetical economy has the following relationship between its real domestic output and the input quantities necessary for producing that level of output. (a) What is the level of productivity in this economy?
(b) What is the unit cost of production if the price of each input is $2.00?
(c) If the input price decreases from $2 to $1.50, what is the new per unit cost of production? What impact would this have on the short-run aggregate supply curve?
(d) Suppose that instead of the input price decreasing, the productivity had increased by 25%.What will be the new unit cost of production? What impact would this change have on the short-run aggregate supply curve?

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Definitions:

Alkene Products

Chemical substances resulting from reactions involving alkenes, which are hydrocarbons with at least one carbon-carbon double bond.

Predominate

To be the strongest or main element; to have a commanding or dominant position.

2-Methylbutane

An organic compound, also known as isopentane, characterized by a branched chain of carbon atoms, used as a refrigerant and in organic synthesis.

2-Methylbut-1-ene

An alkene with the formula C5H10, featuring a double bond at the first position and a methyl group at the second position.