Instructions: Visit the US Department of Labor’s Bureau of Labor Statistics at h
ID: 1117467 • Letter: I
Question
Instructions: Visit the US Department of Labor’s Bureau of Labor Statistics at http://www.bls.gov/bls/newsrels.htm
Question 1: Click on Productivity and Technology. What has been happening recently to productivity and costs of production?
Question 2: Would the change in productivity impact the demand or supply curve for a product? Explain.
Question 3: Click on Real Earnings under Major Economic Indicators. What has been happening recently to earnings of U.S. workers?
Question 4: What impact is this likely to have on the demand for Spam (the food not junk email)? Reflect this change by describing how supply and demand will react to the change.
Explanation / Answer
1) According to data provide by BLS related to productivity and cost of production by sector the following observations were made:
a. Labor productivity in non farm sector has been increased by 3 percent duringthird quarter of 2017. If we compare labor productivity of same sector in this quarter with the same quarter of previous year 2016 then it it has been also increased by 1.5%. Simulateneously, the cost of labor in this non farm business sector has also increaed by 0.5% in 3rd quarter of 2017 but has decreased by 0.1% over last four quarters.
Similarly the labor productivity changes in latest quarter and from last four quarters along with labor cist can be seen in the given table for other sectors as well:
2) If productivity increases under a sector or for a particular good/service then the supply curve shifts upward showing positive increase in supply. This will make increae in output and reduction in price as cost decline.
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Sector Labor Producity Labor cost Change in third quarter of 2017 Change from last four quarters Change in last quarter of 2017 Change from last four quarters Manufacturing decrease 5% Increased 0.1% Increased 6.2% Increased 0.7% Durable manufacturing Decreased 5.7% Non durable manufacturing sector Decreased 4.6%