-The First Table Above Gives the Labor Demand and Labor

question 251

Essay

$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Real wage rate } \\\text { (2005 dollars) }\end{array} & \begin{array} { c } \text { Labor demand } \\\text { (billions of } \\\text { hours per } \\\text { year) }\end{array} & \begin{array} { c } \text { Labor supply } \\\text { (billions of } \\\text { hours per } \\\text { year) }\end{array} \\\hline 5 & 360 & 260 \\\hline 10 & 325 & 275 \\\hline 15 & 300 & 300 \\\hline 20 & 280 & 330 \\\hline\end{array}$$
$$\begin{array} { |c | c | } \begin{array} { c } \text { Employment } \\\text { (billions of } \\\text { hours per } \\\text { year) }\end{array} & \begin{array} { c } \text { Real GDP } \\\text { (trillions of } \\\text { 2005 dollars) }\end{array} \\\hline 100 & 2.0 \\\hline 200 & 3.0 \\\hline 300 & 3.8 \\\hline 400 & 4.4 \\\hline\end{array}$$
-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?
If you cannot determine a precise amount,give the range in which potential GDP must lie.