Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

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Answer 1

Question

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.

Economics Concept Introduction

Production Function: Production functions explain the relationship between input and output.

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Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40% ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.

Answer 2

Question

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.

Economics Concept Introduction

Production Function: Production functions explain the relationship between input and output.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.

Economics Concept Introduction

Production Function: Production functions explain the relationship between input and output.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.

Economics Concept Introduction

Production Function: Production functions explain the relationship between input and output.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.

Economics Concept Introduction

Production Function: Production functions explain the relationship between input and output.

Answer 6

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.

Economics Concept Introduction

Production Function: Production functions explain the relationship between input and output.

Answer 7

Chapter 17, Problem 1VQP

To determine

Explain how increase in labor shifts the long run aggregate supply (LRAS) curve.

Answer 8

Expert Solution & Answer

Explanation of Solution

A production function refers to the output or real GDP, which depend on inputs such as labor, capital, and technology. An increase in labor shifts the production function, it increases the real GDP, and thereby the economic growth. This is further explained with the help of a figure shown below:

Economics (Book Only), Chapter 17, Problem 1VQP

In Figure 1, the vertical axis of panel A and panel B measures real GDP and price, respectively. The horizontal axis of panel A and panel B measures labor and real GDP, respectively. With the given production function Q=T(L,K), a rise in quantity of labor supply in the market from L₁ to L₂ rises the real GDP of the nation from Q₁ to Q₂. At Q₁ quantity of real GDP and L₁ quantity of labor supply, long run aggregate supply is LRAS₁. Change in labor supply in the market shifts the long run aggregate supply curve to rightward from LRAS₁ to LRAS₂.