suppose that table shows economy\'s relationship between real output and the inp
ID: 1186802 • Letter: S
Question
suppose that table shows economy's relationship between real output and the input needed to produce that output
a. what is productivity
b. what is per unit cost of production if the price of each unit is $2
c.assume that the price increases from $2-$3 with no change in productivity. What is new per unit cost of prod?In what direction would be $1 increase in input price push the economy's agg supply curve? what effect would shift of agg supply have on the price level and level of real output?
d. suppose that increase in input price does not occur but instead the productivity increases by 100 %. What would be new cost per unit of production?What effect would it have on agg supply curve?and the price level andreal output?
Input quantity Real GDP
150.0 $400
112.5 300
75.0 200
Explanation / Answer
a)- 400/150=2.66
b)-cost of production per unit incase of $2 price=400/(150*2)=1.33
c)-cost of production per unit incase of $3 price=400/(150*3)= .99
inrease productivty will decrease the cost of production,and profits will increase. this will prompt suppliers to increase the supply. now there will excess supply in the market which in the long run will result in decrease in prices. rreal out will increase in the long run
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