If firms set prices such that their real profit per worker is 20% of the total output per worker, and workers successfully negotiate a real wage that is 85% of the total output per worker, the economy is considered to be at a stable supply-side equilibrium.
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An economy is operating at a level of employment where workers are demanding a real wage equivalent to 75% of the output per worker, while firms are setting prices to achieve a real profit per worker equivalent to 30% of the output per worker. What is the most likely immediate outcome of this situation?
Compatibility of Economic Claims
Analyzing Claims on Economic Output
In an economy operating at a stable supply-side equilibrium, the total output produced per worker is fully distributed between wages and profits. If firms' real profit per worker constitutes 25% of the total output per worker, then the real wage paid to workers must constitute ____% of the total output per worker for the claims to be compatible.
Figure 4.5: Supply-Side Equilibrium and Compatible Claims on Output