Assume that a Cob-Dougls production functionis a god representaion of theeconomy, the substitution efecti stronger than the income efect an tht theeconomy was intaly at quirum. Suppose that Congress pases alaw thatrequires al orersto retre at g 72, nstead of 6. Hthe wage is fexble, whatil happent uirium outpu?The equilbrium output level wi ncreaseOThe euirium outut eve wil derese( The equilibrium output level will emain constantNot enough information i gven to detemine the answer

A flexible real wage rate system raises the real wage rate while lowering the equilibrium labor…

Assume that a Cob-Dougls production funcin is god reprsetin ofthe economy,the substutin efeti stronger than the income efect, and that the economy was initaly t quirum. Suppose that Congress pases alaw that requires all orkers to retreat ge 72 instead of 65. the wage i lecble, what wil happen t quirium oupu? O The equilbrium output level will ncrase The equlirium output leve il decese OThe eulibrium outut eve il main constant Not enough infomaton i gven todetemin he nswer

Assume that a Cob-Dougls production funcin is god reprsetin ofthe economy,the substutin efeti stronger than the income efect, and that the economy was initaly t quirum. Suppose that Congress pases alaw that requires all orkers to retreat ge 72 instead of 65. the wage i lecble, what wil happen t quirium oupu? O The equilbrium output level will ncrase The equlirium output leve il decese OThe eulibrium outut eve il main constant Not enough infomaton i gven todetemin he nswer

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 3SCQ: Imagine that the government reworks the welfare policy that was affecting Jonathan in question 1, so...

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Some economists believe that the U.S. economy as awhole can be modeled with the following productionfunction, called the O,bb-Douglas prod11ctio11 Ju11ctio11:Y = AK1/3 L 2/3,where Y is the amount ol outpu~ K is cl,e amount ofcapital, Lis the an10u.nt of labor, and A is a paran,eterthat measures the slate of technology. For this productionfunction, tl,e marginal product of labor isMPL = (2/3) A(K/ L)1/3 ·Suppose that the price of output Pis 2, A is 3, K is1,000,000, and Lis 1,000. The labor market is competitive,so labor is paid the value of its marginal product.a. Calcula te cl,e amount of output produced Y and thedollar value ol output PY.b. Calcula te cl,e wage Wand cl,e real wage W JP. (Note:11,e wage is labor compensation measured in dol•lars, whereas the real wage is labor compensationmeasured in units ol output.)c. Calcula te cl,e labor share (the fraction of the value ofoutpu t that is paid to labor), which is (Wl.)/(PY).d. Calcula te what happens to output Y, the wage W,the…
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