-In the above figure, the economy is at point A and the money wage rate rises by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $18.0 trillion.
B) $18.0 trillion.
C) more than $18.0 trillion.
D) Without more information, it is impossible to determine which of the above answers is correct.

Question

-In the above figure, the economy is at point A and the money wage rate rises by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $18.0 trillion. 
B) $18.0 trillion. 
C) more than $18.0 trillion. 
D) Without more information, it is impossible to determine which of the above answers is correct.

Quizplus · Accepted Answer

When the money wage rate rises by 10 percent and the price level remains constant, the cost of production for firms increases. This typically leads to firms reducing the quantity of output they are willing to supply because it becomes more expensive to produce the same amount of goods and services. Therefore, firms will be willing to supply output equal to less than $18.0 trillion.

-In the Above Figure, the Economy Is at Point a and the Money