EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 20, Problem 3P
Sub part (a):
To determine
The average output per worker and the average output per acre.
Sub part (b):
To determine
The average output per worker and the average output per acre in 2020.
Sub part (c):
To determine
The percentage change in productivity of worker and land.
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Suppose there exist two imaginary countries, Yosemite and Sequoia. Their labor forces are each capable of supplying four million hours per day that
can be used to produce pistachios, chinos, or some combination of the two. The following table shows the amount of pistachios or chinos that can be
produced by one hour of labor.
Country
Yosemite
Sequoia
Pistachios
(Pounds per hour of labor)
8
LO
5
Chinos
(Pairs per hour of labor)
16
20
2. Suppose that the table below shows an economy's relationship
between real output and the inputs needed to produce that output:
LO4
Input
Quantity
Real
GDP
150.0
$400
112.5
300
75.0
200
a. What is productivity in this economy?
b. What is the per-unit cost of production if the price of each input
unit is $2?
c. Assume that the input price increases from $2 to $3 with no
accompanying change in productivity. What is the new per-unit cost
of production? In what direction would the $1 increase in input price
push the economy's aggregate supply curve? What effect would this
shift of aggregate supply have on the price level and the level of real
output?
d. Suppose that the increase in input price does not occur but,
instead, that productivity increases by 100 percent. What would be
the new per-unit cost of production? What effect would this change
in per-unit production cost have on the economy's aggregate supply
curve? What effect would this shift of aggregate supply have on the
price…
Chapter 20 Solutions
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