$$\begin{array} { | l | c | c | }
\hline \begin{array} { c }
\text { Real wage rate } \
\text { (2005 dollars } \
\text { per hour) }
\end{array} & \begin{array} { c }
\text { Quantity of labor } \
\text { demanded (billions } \
\text { of hours peryear) }
\end{array} & \begin{array} { c }
\text { Quantity of labor } \
\text { supplied (billions } \
\text { of hours per year) }
\end{array} \
\hline 15 & 70 & 10 \
\hline 20 & 60 & 20 \
\hline 25 & 50 & 30 \
\hline 30 & 40 & 40 \
\hline 35 & 30 & 50 \
\hline
\end{array}$$
$\begin{array}{|c|c|}
\hline\text { Real GDF } & \text { Quantity of labor } \
\text { (trillions of 2005 } & \text { (billions of hours } \
\text { dollars per year) } & \text { per year) } \
\hline 3 & 20 \
\hline 9 & 30 \
\hline 14 & 40 \
\hline 18 & 50 \
\hline 21 & 60 \
\hline
\end{array}$
-The tables above show the labor market and the production function schedule for the country of Pickett. Potential GDP is ____________

Question

$$\begin{array} { | l | c | c | } 
\hline \begin{array} { c } 
\text { Real wage rate } \
\text { (2005 dollars } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { demanded (billions } \
\text { of hours peryear) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { supplied (billions } \
\text { of hours per year) }
\end{array} \
\hline 15 & 70 & 10 \
\hline 20 & 60 & 20 \
\hline 25 & 50 & 30 \
\hline 30 & 40 & 40 \
\hline 35 & 30 & 50 \
\hline
\end{array}$$ 
 $\begin{array}{|c|c|}
\hline\text { Real GDF } & \text { Quantity of labor } \
\text { (trillions of 2005 } & \text { (billions of hours } \
\text { dollars per year) } & \text { per year) } \
\hline 3 & 20 \
\hline 9 & 30 \
\hline 14 & 40 \
\hline 18 & 50 \
\hline 21 & 60 \
\hline
\end{array}$
-The tables above show the labor market and the production function schedule for the country of Pickett. Potential GDP is ____________

Quizplus · Accepted Answer

Potential GDP is the level of GDP when the labor market is in equilibrium. From the first table, equilibrium occurs when the quantity of labor demanded equals the quantity of labor supplied, which is at 40 billion hours per year. From the second table, when the quantity of labor is 40 billion hours per year, the real GDP is $14 trillion.

-The Tables Above Show the Labor Market and the Production