Final answer:
The incorrect statement is 'Labor hours are all equally productive.' This overlooks the factors that influence productivity, such as technology, human capital, and efficiency. Real GDP is affected by the quantity and productivity of labor as described by the aggregate production function.
Step-by-step explanation:
The statement that is incorrect is: Labor hours are all equally productive. This statement does not take into account the variety of factors that can affect the productivity of labor hours, such as changes in technology, levels of human capital, physical capital, and efficiency improvements. In reality, not all labor hours contribute to real GDP equally due to varying productivity levels.
It is also important to understand the relationship between the quantity of labor and real GDP as demonstrated by the aggregate production function. An increase in the quantity of labor, assuming it is productive, and a corresponding decrease in leisure hours will generally lead to an increase in real GDP. This creates a movement along the production function only if all other influences on production remain the same, which is a ceteris paribus condition.
Furthermore, the supply curve of labor can vary in its responsiveness to changes in real wage due to substitution and income effects. As wages increase, the quantity of labor supplied can increase, decrease, or stay the same, based on individual preferences for leisure versus consumption.