In: Economics
Suppose that the table below shows an economy’s relationship
between real output and the inputs needed to produce that
output:
Input Quantity | Real GDP |
75 | $400 |
56.25 | 300 |
37.5 | 200 |
a. What is the level of productivity in this
economy?
Instructions: Round your answer to two decimal
places.
( )
b. What is the per-unit cost of production if the
price of each input unit is $3?
Instructions: Round your answer to two decimal
places.
( ) $
c. Assume that the input price increases from $3
to $4 with no accompanying change in productivity.
What is the new per-unit cost of production?
Instructions: Round your answer to two decimal
places.
( ) $
In what direction would the $1 increase in input price push the
economy’s aggregate supply curve?
The aggregate supply curve would shift to
the (select left or right ) .
What effect would this shift of aggregate supply have on the price
level and the level of real output? (
select: Price level would increase and real output would
decrease. or Price level would decrease and real output would
remain the same. or Price level would decrease and real output
would increase. or Both price level and real output would remain
the same. )
d. Suppose that the increase in input price does
not occur but, instead, that productivity increases by 75% percent.
What would be the new per-unit cost of production?
Instructions: Round your answer to three decimal
places.
( ) $
What effect would this change in per-unit production cost have on
the economy’s aggregate supply curve?
The aggregate supply curve will shift to
the (select left or right ) .
What effect would this shift of aggregate supply have on the price
level and the level of real output? (select : Price level
would decrease and real output would increase. or Price level would
increase and real output would decrease. or Price level would
decrease and real output would remain the same. or Both price level
and real output would remain the same. )