I need assitance on how to get these answers. Question 5. The short and medium run: Aggregate supplyIn an economy, the firms profit-maximize by comparing the MPL to the wage:0.5 A √K/√L = wAnd workers negotiate their wage raises by looking at the # of jobs and the expected inflation:EP√LPThe productivity is A=3.7 and there is K = 36 of capital. Workers expect the price level EP = 2.(a) Express the labor market equilibrium condition for P as a function of L. That is, isolate P andhave everything else on the right-hand side. Keep L but plug in and simplify everything else.W =(b) Use the production function Y = A√K√L to substitute labor L in the labor market and obtainthe AS curve as P(Y). That is, have √P isolated and everything else, including Y, on the right-hand side(c) Without shocks and policies, the economy is in the long-term equilibrium at Yo=74, Po=2. Afiscal expansion moves the expenditure to Y₁=80.4 in the very short-run and to Y₂=79 in theshort run. Remember the distinction between very short and short. With that, find:the very short run outputthe very short run price levelthe short run price level(d) Show your three results from (c) in an AS/AD graph.Answers Provided:5. (a) P = 0.18 * L (b) √P √0. 18.Y3.7√36(c) 74, 2, 2.28

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In an economy, the firms profit-maximize by comparing the MPL to the wage: 0.5.A. √K/√L = w And workers negotiate their wage raises by looking at the # of jobs and the expected inflation: EP W = √L P The productivity is A=3.7 and there is K = 36 of capital. Workers expect the price level EP = 2. (a) Express the labor market equilibrium condition for P as a function of L. That is, isolate P and have everything else on the right-hand side. Keep L but plug in and simplify everything else. (b) Use the production function Y = A√√ī to substitute labor L in the labor market and obtain the AS curve as P(Y). That is, have √P isolated and everything else, including Y, on the right- hand side

In an economy, the firms profit-maximize by comparing the MPL to the wage: 0.5.A. √K/√L = w And workers negotiate their wage raises by looking at the # of jobs and the expected inflation: EP W = √L P The productivity is A=3.7 and there is K = 36 of capital. Workers expect the price level EP = 2. (a) Express the labor market equilibrium condition for P as a function of L. That is, isolate P and have everything else on the right-hand side. Keep L but plug in and simplify everything else. (b) Use the production function Y = A√√ī to substitute labor L in the labor market and obtain the AS curve as P(Y). That is, have √P isolated and everything else, including Y, on the right- hand side

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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