Suppose that the markup of goods prices over marginal cost is 10%, and that the wage setting equation is w = p (1 - .5u + z), where u is the unemployment rate and z is a variable that reflects the impact of minimum wage policy and unemployment benefits on the wage setting relations.

a. what is the real wage, as determined by the price-setting equation?

b. what is the natural rate of unemployment if z=0.009?

c. suppose that due to the competition the markup of prices over costs decreases to 2%, and z increases to 0.01 due to the changes in minimum wage policy. what happens to the natural rate of unemployment? explain the logic behind your answer.

using the ws and ps relations explain separately the impacts of a reduction and of an increase in the unemployment rate on the real wages.

The new york times (nov. 30, 1993) reported that “the inability of opec to agree last week to cut production has sent the oil market into turmoil . . [leading to] the lowest price for domestic crude oil since june 1990.” why were the members of opec trying to agree to cut production? so they could save more oil for future consumption so they could lower the price so they could raise the price why do you suppose opec was unable to agree on cutting production? because each country has a different production capacity because each country experiences different production costs because each country has an incentive to cheat on any agreement the newspaper also noted opec’s view “that producing nations outside the organization, like norway and britain, should do their share and cut production.” what does the phrase “do their share” suggest about opec’s desired relationship with norway and britain? opec would like norway and britain to keep their production levels high. opec would like norway and britain to act competitively. opec would like norway and britain to join the cartel.