The Tables Above Show a Nation's Labor Demand and Labor

question 43

Multiple Choice

$\begin{array}{l}\begin{array} { c c c } \hline & \begin{array} { c } \text { Quantity of labor } \\\text { demanded }\end{array} & \begin{array} { c } \text { Quantity of labor } \\\text { supplied }\end{array} \\\begin{array} { c } \text { Real wage rate } \\\text { (2005 dollars) }\end{array} & \begin{array} { c } \text { billions of hours } \\\text { per year) }\end{array} & \begin{array} { c } \text { (billions of hours } \\\text { per year) }\end{array} \\\hline 50 & 80 & 100 \\40 & 90 & 90 \\30 & 100 & 80 \\20 & 110 & 70 \\10 & 120 & 60 \\\hline\end{array}&\begin{array} { c c } \hline \begin{array} { c } \text { Employment } \\\text { (billions } \\\text { of hours } \\\text { per year) }\end{array} & \begin{array} { c } \text { Real GDP } \\\text { (billions of } \\\text { 2005 dollars) }\end{array} \\\hline 60 & 2.0 \\70 & 3.0 \\80 & 3.7 \\90 & 4.2 \\110 & 4.5 \\\hline\end{array}\end{array}$ The tables above show a nation's labor demand and labor supply schedules and its production function.
- Given the equilibrium in the labor market, potential GDP is

• A)$4.5 trillion.
• B)$2.0 trillion.
• C)$3.7 trillion.
• D)$3.0 trillion.
• E)$4.2 trillion.

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Definitions:

Fixed-Period Model

An inventory control model where orders are placed at fixed intervals, such as weekly or monthly, regardless of inventory level.

Safety Stock

A quantity of stock kept on hand to protect against unexpected increases in demand or delays in supply delivery.

Production Order Quantity Model

An economic order quantity technique applied to production orders.

Production Departments

Divisions within a manufacturing or production company responsible for the actual production of goods or services.