How are skilled and unskilled workers in an economy likely to be affected if firms adopt skill-biased technologies?
What will be an ideal response?
A skill-biased technology change increases the productivity of skilled workers relative to that of unskilled workers. This increases the marginal productivity of skilled workers, causing the demand for their labor and their wages to increase. Conversely, such technology decreases the labor demand for unskilled workers and lowers their wages.
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A decrease in the real wage rate
A) shifts the labor demand curve rightward. B) shifts the labor demand curve leftward. C) shifts the labor supply curve leftward. D) none of the above because a change in the real wage rate does not shift either the labor demand or labor supply curve.
Adverse selection refers to when:
A. one party to a transaction has more information than the other and this results in a bargaining dispute. B. one party selects the wrong strategy and they are displeased with their selection. C. one party to a transaction has more information than the other and transactions occur less frequently due to the information asymmetry. D. neither party is willing to be party to a transaction because they don’t have enough information.
Individuals behave so as to maximize their utility
a. True b. False Indicate whether the statement is true or false
Investment is a positive function of the national income level
Indicate whether the statement is true or false