According to the classical model, labor supply is exogenous. However, if labor supply is an increasing function of real wage; assume Ls=L(W/P) with L’ (W/P) > 0 A) With the model change, how does an increase in capital stock affect emplyment nad real wages B) And how does does an increase in gov purchase affect total output?

According to the classical model, labor supply is exogenous. However, if labor supply is an increasing function of real wage; assume Ls=L(W/P) with L’ (W/P) > 0 A) With the model change, how does an increase in capital stock affect emplyment nad real wages B) And how does does an increase in gov purchase affect total output?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.12P

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