Draw a labor supply curve and a labor demand curve.
a. Label them LS0 and LD0.
b. Draw...
Draw a labor supply curve and a labor demand curve.
a. Label them LS0 and LD0.
b. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label the point 1. Now suppose a large increase in investment increases labor productivity.
c. Draw a curve that shows the effect of this increase in labor productivity. Label the curve.
d. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label the point 2.
Answers: 3
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