Suppose the marginal product of labor is , where Y is 12, and L is the quantity of workers. The supply of labor is given by L = 110 + 2.5 ∗ w, and the real wage is 41. Assume there has been steady technological progress, increasing the real wage by five percent per year, with no changes in employment or unemployment. This year, however, the rate of productivity growth is an unexpected zero percent. Calculate the rate of unemployment that results when the labor supply has decreased by five percent and the real wage is 43.

Question

Suppose the marginal product of labor is  , where Y is 12, and L is the quantity of workers. The supply of labor is given by L = 110 + 2.5 ∗ w, and the real wage is 41. Assume there has been steady technological progress, increasing the real wage by five percent per year, with no changes in employment or unemployment. This year, however, the rate of productivity growth is an unexpected zero percent. Calculate the rate of unemployment that results when the labor supply has decreased by five percent and the real wage is 43.

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The Answer of Suppose the marginal product of labor is  , where Y is 12, and L is the quantity of workers. The supply of labor is given by L = 110 + 2.5 ∗ w, and the real wage is 41. Assume there has been steady technological progress, increasing the real wage by five percent per year, with no changes in employment or unemployment. This year, however, the rate of productivity growth is an unexpected zero percent. Calculate the rate of unemployment that results when the labor supply has decreased by five percent and the real wage is 43.

Suppose the Marginal Product of Labor Is , Where