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 aggre- gate supply have on the price level and the level of real outnut?
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 aggre- gate supply have on the price level and the level of real outnut?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Answer only question C and D. Thank you.
Transcribed Image Text:4. Suppose that the table presented below shows an economy's
relationship between real output and the inputs needed to pro.
duce that output: LO12.4
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 aggre-
gate supply have on the price level and the level of real output?
Refer to tho
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