Which of the following is not true about technological progress?
A) allow for the production of a larger quantity of goods using the same number of workers
B) lead to the production of new goods
C) lead to the disappearance of old goods
D) cause a reduction in employment in the short run
E) none of the above
E
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It is often argued that gas stations operate inefficiently because they have "excess capacity" in the form of more pumping stations than they would otherwise need if they were operating under conditions of perfect competition
However, can you think of any reason why a gas station franchise owner would wish to install more pumps than he knows will rarely if ever be fully utilized at any one time? Can you explain the economic logic of this "apparent" wastefulness?
An industry utilizes capital and two types of labor. Unskilled labor is a substitute for capital while the skilled labor is complementary to capital. An increase in the price of capital will
A) cause the demand for labor to increase, raising wages of both skilled and unskilled labor. B) cause the wage of unskilled labor to rise relative to the price of skilled labor. C) induce the firms in the industry to cut back on all levels—capital, unskilled and skilled labor. D) cause the demand for skilled labor to rise and the demand for unskilled labor to fall.