Structural unemployment is sometimes said to result from a mismatch between the
ID: 1144902 • Letter: S
Question
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 between the two industries would be equal True O 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. O 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 industryExplanation / Answer
Answer:- Wages between the two industries would be equal.
Correct Answer:- True
Reason:- Wages would be equal in both the industries. If they are not equal, then workers would opt to work in that industry which offers higher wages pushing the wage in that industry down due to greater supply of labor.
Answer:- This would cause the demand for labor in the auto manufacturing industry to………………. And the demand for labor in the aircraft manufacturing industry to…………
Correct Answer:- Fall ; increase
Reason:- If the industry starts to import autos, there will be a decline in the labor demand in auto industry due to lower domestic production. While of the country starts exporting aircraft, there will be an increase in the labor demand in aircraft manufacturing industry due to higher domestic production.
Answer:- The correct options are:-
Wages in the auto industry would fall in short run
Wages in the aircraft industry would raise in short run
Reason:- Lesser demand in auto industry will cause the wage to fall while higher labor demand in aircraft industry will increase the wage rates.
Answer:- If for some reason wage fail to adjust to new equilibrium level 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
Correct Answer:-Shortage of workers in the aircraft industry and surplus of workers in the auto industry