In the two-sided search model, an increase in productivity
A) shifts v(Q) down, increasing Q and j.
B) shifts v(Q) up, increasing Q and decreasing j.
C) shifts v(Q) up, decreasing Q and j.
D) shifts v(Q) down, decreasing Q and increasing j.
E) shifts v(Q) up, increasing Q and j.

Question

Quizplus · Accepted Answer

An increase in productivity raises the value of matches, shifting v(Q) up, which increases both the quantity of matches (Q) and the job-finding rate (j).

In the Two-Sided Search Model, an Increase in Productivity