Suppose the Economy's Production Function Is Y = A(300N -

question 72

Essay

Suppose the economy's production function is Y = A(300N - N²).The marginal product of labour is MPN = A(300 - 2N).Suppose that A = 10.The supply of labour is NS = 0.05w + 0.005G.
a.If G is 26,000,what are the real wage,employment,and output?
b.If G rises to 26,400,what are the real wage,employment,and output?
c.If G falls to 25,600,what are the real wage,employment,and output?
d.In cases (b)and (c),what is the government purchases multiplier;that is,what is the change in output divided by the change in government purchases?

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Definitions:

Average Cost Formula

A method used to calculate the cost of goods sold and ending inventory by taking the total cost of goods available for sale and dividing it by the total number of units available for sale.

Cost of Goods Sold

The cost of goods sold (COGS) refers to the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Specific Identification

An inventory valuation method where each item in inventory is matched with a specific cost.

Inventory Costing

Inventory costing is the method used to assign costs to inventory items, determining the cost of goods sold and remaining inventory value.