3 . (50 points total – 5 for each ofpart and 15 points for completely labeled diagram.) The followin

. (50 points total – 5 for each ofpart and 15 points for completely labeled diagram.) The following equations characterize a country’s closedeconomy. Production function: Y = A·K·N – N2/2 Marginal product of labor: MPN = A·K – N. where the initial values of A = 8 and K = 10. The initial labor supply curve is given as: NS = 20 +9w. a) (10 points)   Find the equilibrium levels of thereal wage, employment and output (show work). In the space below, draw two diagrams
vertically with the labor market on the bottomgraph and the production function on the top graph. Be sure tolabel everything including these initial equilibrium points aspoint A.
(15 points for correct and completely labeleddiagrams) We now have numerous changes to our economic conditions (all isnot constant). Think of all these changes happening together, thatis, we go from one state of economic affairs to a different stateof economic affairs. Below are the changes. The labor supply changes and is now: NS = 24 + 9w. K goes down from 10 to 8. b) (5 points) What could cause such a change in labor supply?Please give
two specific and
wellsupported reasons. Be sure to explain your answer. c) (10 points) Solve for the new equilibrium values of the realwage, employment, and output and label as point B. d)(10 points) Explain why exactly why the firm changes theirbehavior… again
… at the same level of labor input……….. Use specific numbers! . . .

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