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a. Given that wages depend on the labor market conditions and prices are set by the firms in such a way that the production function

a. Given that wages depend on the labor market conditions and prices are set by the firms in such a way that the production function is Y=AN. Derive and explain how wages and prices are determined in the medium run. Support your answer with proper graphs. 7 marks

Based on your answer in part a, comment on how is it different from the equilibrium condition in the short run. 3 marks

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