Consider an economy in which the marginal product of labor MPN is MPN = 500 - 2N, where N is the amount of labor used.The amount of labor supplied, NS, is given by NS = 127 + 20w, where w is the real wage and T is a lump-sum tax levied on individuals.

a. What are the equilibrium values of employment and the real wage?

b. The government passes minimum-wage legislation that requires firms to pay a real wage greater than or equal to 10.What are the resulting values of employment and the real wage?

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