Suppose demand conditions in industries X and Y are identical but that productivity increases by 5% in industry X and 2% in industry Y. If nominal wages rise by 3%, we should expect that unit labor costs will O increase by the same amount in both industries, in accord with the overall increase in the average wage. O increase in industry X and decrease in industry Y. O decrease in industry X and increase in industry Y. O increase in both industries, but more in industry X than industry Y.

Suppose demand conditions in industries X and Y are identical but that productivity increases by 5% in industry X and 2% in industry Y. If nominal wages rise by 3%, we should expect that unit labor costs will O increase by the same amount in both industries, in accord with the overall increase in the average wage. O increase in industry X and decrease in industry Y. O decrease in industry X and increase in industry Y. O increase in both industries, but more in industry X than industry Y.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.10P

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Historians have been able to find out how the relationship between wage levels and capital costs developed in England and France from the early 1600s until the first part of the 1800s. What does not characterize this development? Wage levels relative to capital costs fell in the early 1600s in France and never rebounded to the same level in the period up to 1820 O After about 1700, England experienced a long period of steadily higher wages relative to capital costs. O Since the two countries are so close to each other, the development is exactly the same in the two countries. Compared to France, labour in England was much more expensive relative to capital at the start of the Industrial Revolution.
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What is the impact on the labour market due to a reduction the productivity of workers? Select one: O a. labour supply shifts to the left; wage rate increases and level of employment is lower O b. labour demand shifts to the left; wage rate decreases and level of employment decreases O c. labour demand shifts to the right; wage rate increases and level of employment increases O d. labour supply shifts to the right; wage rate decreases and level of employment is higher Next page age search [田