Efficiency wages
a. increase frictional unemployment by keeping wages above equilibrium.
b. decrease frictional unemployment by keeping wages at equilibrium.
c. increase structural unemployment by keeping wages above equilibrium.
d. decrease structural unemployment by keeping wages at equilibrium.
c
You might also like to view...
The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product
Indicate whether the statement is true or false
Suppose Korea exports skilled labor-intensive goods like construction equipment to the rest of the world and imports clothing, an unskilled labor-intensive good. Both the goods use skilled labor and unskilled labor as their only inputs. Recently the skilled labor endowment of Korea has increased substantially, but the size of the unskilled labor force has remained unchanged. a. What is the effect of the change in endowment on the shape and position of the production-possibility curve of Korea? Illustrate your answer with the help of a suitable diagram.b. What is the effect of the change in factor endowment on the actual production quantities of the two goods in Korea, assuming the product price ratio remains unchanged in the international market? Explain and illustrate graphically.c.
Assuming the product prices are unchanged, what is the effect of the change in factor endowment on Korea's willingness to trade? Explain, using your diagram. What will be an ideal response?