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

question 14

Essay

Suppose the economy's production function is Y = A(300N - N2).The marginal product of labor is MPN = A(300 - 2N).Suppose that A = 10.The supply of labor 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:

Ancillary Agreements

Additional agreements that are ancillary to a main agreement, providing for supplementary details and obligations not covered in the primary contract.

Employment Contracts

Legal agreements specifying the terms and conditions of employment between an employer and employee.

Indivisible Agreement

A contract or agreement that cannot be separated into individual parts, requiring full performance by the parties involved.

Separate Consideration

The distinct value or compensation given in exchange for a service or agreement, specifically identifiable apart from other considerations.