Suppose that new high-technology farming equipment is developed. These new machines are substitutes for low-income workers such as farm laborers, but they are complements for high- income workers such as farm technicians and farm owners. This new technology will _______ wages in for low-income workers and _______ income inequality.

Question

Quizplus · Accepted Answer

The new technology, being a substitute for low-income workers, will decrease their demand and thus their wages. However, it complements high-income workers, likely increasing their productivity and wages, thereby increasing income inequality.

Suppose That New High-Technology Farming Equipment Is Developed