7. In the economy of Cape Despair, the subsis- tence real wage rate is $15 an hour. Whenever real GDP per hour rises above $15, the popula- tion and whenever real GDP per hour of grows, labor falls below this level, the population falls. The production function in Cape Despair is as follows: Labor (billions of hours per year) Real GDP (billions of 2000 dollars) 0.5 1.0 1.5 2.0 2.5 3.0 3.5 15 21 26 30 33 35 Initially, the population of Cape Despair is con- stant and real GDP per hour of labor is at the subsistence level of $15. Then a technological advance shifts the production function upward by 50 percent at each level of labor.

7. In the economy of Cape Despair, the subsis- tence real wage race is $15 an hour. Whenever real GDP per hour rises above $15, the popula won grows, and whenever real GDP per hour of labor falls below this level, the population falls. The production function in Cape Despair is as follows: Labor Real GDP (billions of hours per year) (billion of 2000 dollars) 0.5 8 1.0 15 1.5 21 2.0 26 2.5 30 3.0 33 3.5 35 Initially, the population of Cape Despair is con- stant and real GDP per hour of labor is at the subsistence level of $15. Then a technological advance shifts the production function upward by 50 percent at each level of labor