Consider the information in the file named HW2 - Production Data for a Single Firm. Currently, the nominal wage rate is W = $5,000 per worker and the price of the output is P = $100 per unit. We already know that the number of workers the firm will want to hire depends on the relationship between the nominal wage it pays each worker and the price per unit of the output that the worker produces. This relationship is captured by the ratio of the two called the real wage.

If the wage rate increases by 68% and the price level increases by 20%, the real wage will change to ————units, the firm will hire ————workers, and will produce a total of ————units of output.

On the other hand, if the wage rate increased by 12% and the price level increased by 40%, the real wage would change to ————units, the firm would hire ————workers, and would produce a total of ————units of output.

 

Transcribed Image Text:

Total Labor Product (Persons) (Tons) 1 200 2 380 3 540 4 680 800 900 7 980 8 1040 1080 10 1100 Total Labor Product (Persons) (Tons) 1 200 2 380 3 540 4 680 800 900 7 980 8 1040 1080 10 1100

Answer rating: 100% (QA)

Labour Totals of product Marginal product of labour 0 0 0 1 200 200 2 380 180 3 540 160 4 680 140 5 ... View the full answer