9. Problems and Applications Q9 Structural unemployment is sometimes said to res
ID: 1140048 • Letter: 9
Question
9. Problems and Applications Q9
Structural unemployment is sometimes said to result from a mismatch between the job skills that employers want and the job skills that workers have. To explore this idea, consider an economy with two industries: auto manufacturing and aircraft manufacturing.
Assume that workers in these two industries require similar amounts of training, and they can choose which industry to train for at the beginning of their careers.
True or False: Wages in the auto manufacturing industry would be less than those in the aircraft manufacturing industry.
True
False
Suppose that one day the economy opens itself to international trade and, as a result, starts importing autos and exporting aircraft.
This would cause the demand for labor in the auto manufacturing industry to ____ and the demand for labor in the aircraft manufacturing industry to _____ .
Suppose that workers in one industry cannot be quickly retrained for the other.
Which of the following accurately describes the effects of the shifts in demand on the equilibrium wages in the two industries? Check all that apply.
Wages in the auto industry would fall in the short run.
Wages in the aircraft industry would rise in the short run.
Wages in the auto manufacturing industry would be greater than those in the aircraft manufacturing industry.
If for some reason wages fail to adjust to the new equilibrium levels as a result of opening up to international trade, there will be_____ of workers in the aircraft industry and _____ of workers in the auto industry.
9. Problems and Applications Q9
Structural unemployment is sometimes said to result from a mismatch between the job skills that employers want and the job skills that workers have. To explore this idea, consider an economy with two industries: auto manufacturing and aircraft manufacturing.
Assume that workers in these two industries require similar amounts of training, and they can choose which industry to train for at the beginning of their careers.
True or False: Wages in the auto manufacturing industry would be less than those in the aircraft manufacturing industry.
True
False
Suppose that one day the economy opens itself to international trade and, as a result, starts importing autos and exporting aircraft.
This would cause the demand for labor in the auto manufacturing industry to ____ and the demand for labor in the aircraft manufacturing industry to _____ .
Suppose that workers in one industry cannot be quickly retrained for the other.
Which of the following accurately describes the effects of the shifts in demand on the equilibrium wages in the two industries? Check all that apply.
Wages in the auto industry would fall in the short run.
Wages in the aircraft industry would rise in the short run.
Wages in the auto manufacturing industry would be greater than those in the aircraft manufacturing industry.
If for some reason wages fail to adjust to the new equilibrium levels as a result of opening up to international trade, there will be_____ of workers in the aircraft industry and _____ of workers in the auto industry.
Explanation / Answer
Assume that workers in these two industries require similar amounts of training and they can choose which industry to train at the beginning of their careers.
FALSE That wage in auto industry would be greater than aircraft industry because wages between the two indutries ( auto and aircraft ) would be equal.Because if it is not , then workers would choose the industry with the higher wage .
After open to international trade, Starts importing autos and exporting aircrafts.
This would cause the demand for labor in the auto manufacturing industry to fall because economy is importing autos from foreign.Therefore, there will be less demand for labor in producing autos. And demand for labor in the aircraft manufacturing industry to rise because economy is exporting domestic aircrafts to foreign , as a result there will more demand for labor in producing aircrafts.
Suppose that workers in one industry cannot quickly retrained for the other. Then , wages in the aircraft industry will rise because of higher demand for labor and wages in auto industry will fall because of lower demand for labor.
Overtime , in the long run new workers will move into the aircraft industry will bring the wage down and will be equal in the two industries in the long run. Hence, Wages in the aircraft industry would rise in the short run. And wages between two industries would be equal in the long run are correct.
If for some reason wages fail to adjust to the new equilibrium levels as a result of opening up to international trade there will be shortage of workers in the aircraft industry and surplus of workers in the auto industry .
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