Wage Inequality Has Been on the Rise in Virtually All

question 25

Multiple Choice

Wage inequality has been on the rise in virtually all high-income industrial economies since the 1970s.The causes are probably numerous,but the leading explanation for the greatest share of the increase in inequality is

• A)the growth of trade with developing countries.
• B)the growth of trade with other high income industrial countries.
• C)technological change which increased the relative demand for skilled workers.
• D)technological change which increased the relative demand for unskilled workers.
• E)technological change which decreased the relative demand for skilled workers.

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Definitions:

Inputs

Resources such as labor, materials, and capital that are used in the production process to create goods or provide services.

Substitutability

The degree to which one product can be replaced by another in the eyes of the consumer.

Derived Demand

The demand for a factor of production or input resulting from the demand for the output that input produces.

Profit-maximizing Level

The output level at which a firm achieves the highest possible profit, determined where marginal cost equals marginal revenue.