If all business firms in the economy pay their employees a total of $45 million and earn business income (before allowing for depreciation) of $10 million from the sale of 1.5 million units of output what are firms' labour costs and business income per unit of output? Suppose an increase in wage rates by 10% raises labour costs but output remains unchanged. How much must the general price level (the GDP deflator) change in order to leave business firms with the same business income after the wage rate increase as they had before the increase?

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The Answer of If all business firms in the economy pay their employees a total of $45 million and earn business income (before allowing for depreciation) of $10 million from the sale of 1.5 million units of output what are firms' labour costs and business income per unit of output? Suppose an increase in wage rates by 10% raises labour costs but output remains unchanged. How much must the general price level (the GDP deflator) change in order to leave business firms with the same business income after the wage rate increase as they had before the increase?

If All Business Firms in the Economy Pay Their Employees