-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.

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Definitions:

Sherman Antitrust Act

A landmark U.S. legislation passed in 1890 that prohibits monopolistic business practices.

Federal Trade Commission Act

A United States federal law established in 1914 to prevent unfair competition and deceptive practices in the marketplace.

Price Fixing

The practice of colluding with other firms to control prices.

Marketing Channel

The paths or routes that products and services take from the time they are produced until they are purchased by consumers, including intermediaries such as distributors and retailers.