Suppose there is a widespread improvement in management practices across an indu

Question

Suppose there is a widespread improvement in management practices across an industry that employs skilled labour. If the labour supply of skilled workers is upward sloping, what happens to the equilibrium level of employment for these workers and their real wage?

Select one:

a. The level of employment falls and the real wage rises

b. The level of employment is unchanged and the real wage rises

c. The level of employment falls and the real wage falls

d. The level of employment rises and the real wage rises

Explanation / Answer

Option d.

For the skilled labors, with the improvement in management practices the productivity increases which increases the demand for skilled labors and so the real wages too.

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