For this question,assume that the aggregate production function is represented by Y = AN.Which of the following represents the price setting relation for this economy?
A)(1 + m)A
B)(1 + m)A / W
C)(1 + m)W
D)W / A
E) none of the above

Question

Quizplus · Accepted Answer

The price setting relation in an economy typically involves the price level (P), wages (W), productivity (A), and possibly a markup (m). However, none of the options provided correctly represents a standard price setting relation based on the given aggregate production function Y = AN. The price setting relation would involve how firms set prices based on costs (like wages) and productivity, often with a markup, but none of the options accurately reflect this in a standard economic model.

For This Question,assume That the Aggregate Production Function Is Represented