Suppose the Marginal product of labor in the economy is given by MPN= .002(16,000-N), while the supply of labor is N=1000 + 1000w.Find the market clearing real wage rate and level of employment.What happens to the wage rate and employment if wealth rises, reducing the supply of labor to N= 500 + 1000w?As in (a), what is the unemployment rate if real wage is 1 more than the equilibrium wage? (hint: solve the real wage and then add it by 1, then find the difference of quantity of labor supplied and demanded).

a. The market-clearing wage rate equates the demand and supply of labour Solve for w first Therefore…

Answered: Suppose the Marginal product of labor…

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Chapter12: Sequences, Series And Binomial Theorem

Section12.3: Geometric Sequences And Series

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Suppose the Marginal product of labor in the economy is given by MPN= .002(16,000-N), while the supply of labor is N=1000 + 1000w.

Find the market clearing real wage rate and level of employment.
What happens to the wage rate and employment if wealth rises, reducing the supply of labor to N= 500 + 1000w?
As in (a), what is the unemployment rate if real wage is 1 more than the equilibrium wage? (hint: solve the real wage and then add it by 1, then find the difference of quantity of labor supplied and demanded).

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