The Accounting of Output at Equilibrium
In an economy at its supply-side equilibrium, explain why the sum of the real wage per worker and the real profit per worker must be exactly equal to the total output per worker.
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In an economy where the total output per worker is fixed, suppose that firms collectively increase the share of output they retain as profit. What is the direct consequence for the real wage paid to workers?
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The Accounting of Output at Equilibrium
Consider an economy at its supply-side equilibrium. If a technological innovation doubles the total output produced per worker, while the share of output that firms retain as profit remains constant, then the real wage per worker must also double.