Question 2 Using a diagram like Figure 9.8 below: hoprolit curves Wage Demand curve (given economy wide demand) Units of output, q (and hours of labour, n) explain in your own words why prices would fall and employment would increase if the economy were at point C in Figure 9.10 below: Labour supply explain in your owrn WOlus increase if the economy were at point C in Figure 9.10 below: Labour supply At A real wage too high and markup too low, firms raise price; and given demand, output falls Average product of labour, A Price-setting W/P-w curve At C real wage too low and markup too high: firms lower price; and given demand, output rises Employment, N (whole economy) Average product of labour, A; Real wage, W/P Price, p ($)

Question 2 Using a diagram like Figure 9.8 below: hoprolit curves Wage Demand curve (given economy wide demand) Units of output, q (and hours of labour, n) explain in your own words why prices would fall and employment would increase if the economy were at point C in Figure 9.10 below: Labour supply explain in your owrn WOlus increase if the economy were at point C in Figure 9.10 below: Labour supply At A real wage too high and markup too low, firms raise price; and given demand, output falls Average product of labour, A Price-setting W/P-w curve At C real wage too low and markup too high: firms lower price; and given demand, output rises Employment, N (whole economy) Average product of labour, A; Real wage, W/P Price, p ($)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 40P: Assume that the supply of law-skilled worker is fairly elastic, but the employers demand for such...

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