Examlex

Solved

Suppose That a Burst of Technological Advancement and Innovation Occurs

question 46

Essay

Suppose that a burst of technological advancement and innovation occurs that increases the demand for highly skilled labor.Use demand/supply analysis to analyze the effect of the technological change on the equilibrium wage and equilibrium employment levels for high skill workers.


Definitions:

Normal Good

A type of good for which demand increases as the income of individuals or the economy grows.

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives.

Income Effect

A change in the quantity demanded of a good or service as a result of a change in real income (purchasing power).

Inferior Good

A type of good for which demand declines as the income of individuals or the economy increases, opposite to normal goods.

Related Questions