Question: Using all the information you learnt in class about the wage and price setting models under labour markets, you are informed that the labour market

Using all the information you learnt in class about the wage and price setting models under labour markets, you are informed that the labour market of Chipata City is characterized by the following: Firms' markup over cost = 5% Wage setting relation: W = P(1 - 0.5u Answer the following questions. a) Determine the real wage b) What is the natural rate of unemployment c) If the value of the price index is 150, determine the nominal wage received by workers in Chipata City d) Explain intuitively why employers and employees are concerned with real wages rather than nominal wages

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