An economy's aggregate production function is given by Y = AKN - N2. The marginal product of labor for this production function is MPN = AK - 2N. Assume that A = 8 and K = 9. Suppose that the labor supply function for this economy is given by NS = 3 + w. Find the equilibrium real wage rate, the full employment level of employment, and the full-employment level of output for this economy.

Draw a production function and labor market diagram vertically as we did in class and label this initial equilibrium point as point A.