Problem
1. What are supply shocks and from what sources can they arise? Distinguish between positive and negative supply shocks.
2. What are factor prices? What classical assumptions are used in explaining how they are determined?
3. Explain each term in the profit function for a firm.
4. What rule do firms follow to determine how much of each input to hire in order to maximize profits?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.