Classify the following scenarios as examples of frictional, structural, or cyclical unemployment, and explain your answer. a. A food-processing factory decides to increase its wages by 50% above what their competitors are paying. They find that fewer workers quit or call in sick, and that they have lower spoilage rates as a result of the more consistent, productive workforce. Their competitors respond by raising wages as well. The quantity of labor supplied to the industry increases to try to take advantage of the higher wages and is higher than the quantity demanded by employers at the new wage. b. Li Wei owns a homebuilding company. During a severe downturn in the housing market, he has to fire many of his subcontractors. c. Which of the three types of unemployment (frictional, structural, or cyclical) will persist even if the wage is at the equilibrium wage? Explain your answer.
Classify the following scenarios as examples of frictional, structural, or cyclical
a. A food-processing factory decides to increase its wages by 50% above what their competitors are paying. They find that fewer workers quit or call in sick, and that they have lower spoilage rates as a result of the more consistent, productive workforce. Their competitors respond by raising wages as well. The quantity of labor supplied to the industry increases to try to take advantage of the higher wages and is higher than the quantity demanded by employers at the new wage.
b. Li Wei owns a homebuilding company. During a severe downturn in the housing market, he has to fire many of his subcontractors.
c. Which of the three types of unemployment (frictional, structural, or cyclical) will persist even if the wage is at the equilibrium wage? Explain your answer.
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