Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 8

Refer to Figure 23.1b and assume that price is fixed at $37,000 and that Buzzer Auto needs 5 workers for every 1 automobile produced. If demand is DM and Buzzer wants to perfectly match its output and sales, how many cars will Buzzer produce and how many workers will it hire? If instead, demand unexpectedly falls from DM to DL , how many fewer cars will Buzzer sell? How many fewer workers will it need if it decides to match production to these lower sales?