Macroeconomics: Principles, Problems, & Policies 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0-07766-077-3
ISBN 13: 978-0-07766-077-2

Chapter 12 - Aggregate Demand and Aggregate Supply - Problems - Page 284: 4

Answer

a) Productivity = 2.67 b) Per unit production cost = $0.75$ c) The \$1 increase in input price pushes the economy's aggregate supply curve to the left. The output will decrease and prices will rise in the short run. d) Per unit production cost = $0.375 The change in per-unit production cost will shift the economy's aggregate supply curve to the right. This reduction in per unit cost will increase the supply of goods at every price level. This will cause prices to fall and output to increase in the short run.

Work Step by Step

a) Productivity = Total output/Total input Productivity = (400+300+200)/)150+112.5+75) Productivity = 2.67 b) Per-unit production cost = Total input cost/Total output Per-unit production cost = ((150x2)+(112.5x2)+(75x2))/(400+300+200) Per-unit production cost = \$0.75 c) Per-unit production cost = Total input cost/Total output Per-unit production cost = ((150x3)+(112.5x3)+(75x3))/(400+300+200) Per-unit production cost = \$1.125 d) Per-unit production cost = Total input cost/Total output Per-unit production cost = ((150x2)+(112.5x2)+(75x2))/(800+600+400) Per-unit production cost = $0.375
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