4. Suppose that the firms' mark-up over costs is 5% and the wage-setting equation is W = P(1-u) where u is the unemployment rate. (a) What is the real wage as determined by the price-setting relationship? (b) Solve for the natural rate of unemployment, that is, the rate of unemploy- ment at the real wage determined by the price setting relationship. You will need to use further information scattered through the chapter. (c) Using production function in expression (9.2), Y = N, and the notation that the total labour force is equal to L when employment equal N, solve for the natural level of output. Y = N when employment is at the natural rate= (1-un) L. (d) Suppose that the mark-up of prices over costs increases to 10%. What happens to the natural rate of unemployment? Explain the logic behind the answer and the sense in which there is nothing "natural" about the natural rate of unemployment.