Question

1) Assume that the cost of a unit of labor (W) is $50 (the nominal wage) and a unit of labor 

produces one unit. Calculate the price per unit if mark up is :

i. 20%

ii. 40%

Answer 1

$P_1=\frac{50}{1+\frac{20}{100}}=41.7$ $.

$P_2=\frac{50}{1+\frac{40}{100}}=35.7$ $.