Comparative Statics with Total Factor Production Shocks
Predicting how a productivity or wage shock changes the competitive price of a firm's output.
A hospital uses a particular production function prod fn to provide emergency healthcare services, with a performance indicator of prod level representing the effectiveness of its medical team. The hospital recently faced an increase in the price of labor by labor price increase. Assume a competitive market, so that in the long run the price of output equals the unit cost of production, and that productivity A and the rental price of capital do not change. Answer with the percentage change in the price of output. Assuming all other costs remain constant, what effect does this have on the equilibrium price of their healthcare services?
Use it
from datasets import load_dataset
ds = load_dataset("narunraman/steer_me", "tfp_shocks")curl "https://steer-benchmark.cs.ubc.ca/api/sample?element_name=tfp_shocks&n=5&seed=42"
See the Reference for the parameters.