Suppose the Marginal Product of Labor in the Economy Is

Essay

Suppose the marginal product of labor in the economy is given by MPN = 0.002(16,000 - N),while the supply of labor is 1000 + 1000w.
(a)Find the market-clearing real wage rate and level of employment.
(b)What happens to the wage rate and employment if wealth rises,reducing the supply of labor to 500 + 1000w?
(c)What happens to the wage rate and employment if after wealth has risen as in part (b),there is a productivity shock that increases the marginal product of labor to MPN = 0.0025(16,000 - N)?