9 Extended Problems -The Table Above Shows the Aggregate Production Function in the }

question 38

Essay

9 Extended Problems
$$\begin{array} { | c | c | } \begin{array} { c } \text { Labor } \\\text { (millions of hours per } \\\text { year) }\end{array} & \begin{array} { c } \text { Real GDP } \\\text { (millions of 2005 dollars) }\end{array} \\\hline 200 & 6,800 \\\hline 240 & 7,680 \\\hline 280 & 8,400 \\\hline 320 & 8,960 \\\hline 360 & 9,360 \\\hline\end{array}$$
-The table above shows the aggregate production function in the economy of Prescottia.The people of Prescottia pay no taxes and are willing to work 248 million hours a year for a real wage rate of $8 an hour,and for each dollar increase in the real wage,they are willing to work 4 million additional hours per year.
a) Draw the economy's aggregate production function.
$$\begin{array} { | c | c | } \begin{array} { c } \text { Wage rate } \\\text { (dollars per hour) }\end{array} & \begin{array} { c } \text { Quantity of labor demanded } \\\text { (millions of hours per year) }\end{array} \\\hline 24 & 200 \\\hline 20 & 240 \\\hline 16 & 280 \\\hline 12 & 320 \\\hline\end{array}$$
b) Prescottia's demand for labor schedule is in the table above.Draw Prescottia's demand for labor and supply of labor curves.
c) What are the economy's full-employment quantity of labor and real wage rate?
What is the country's potential GDP?
d) Suppose that Prescottia's government introduces a 25 percent income tax.Using your graph,what happens to the demand for labor?
What happens to the supply of labor?
Explain.
e) After the tax is imposed,what happens to Prescottia's full-employment quantity of labor?
What happens to Prescottia's potential GDP?

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Definitions:

Polyamory

Mutually acknowledged emotional, sexual, or romantic connections with multiple partners.

Non-monogamy

A relationship or marriage arrangement that does not require exclusivity, allowing partners to have relationships or sexual encounters with others.

Sexual Double Standard

A societal norm that allows or even encourages disparate sexual behaviors for individuals based on their gender, typically more permissive for men than for women.

Social Power

The ability of an individual or group to influence or control the actions, behaviors, and opinions of others within a social context.