In a simple economy,there are 100 workers.50 workers produce clothing: one worker produces one unit of clothing.The other 50 workers produce food: one worker produces one unit of food.By trading goods,each person consumes 0.5 unit of clothing and 0.5 unit of food.A technological improvement enables one worker to produce two units of clothing.The results are that 40 workers will be producing 80 units of clothing and 60 workers will be producing food and that each person consumes 0.8 units of clothing and 0.6 units of food.Which of the following is true?
A) Workers in the sewing industry are worse off.
B) Workers in the clothing industry are worse off.
C) The increase in the productivity of clothing workers shifted the demand for clothing workers rightward.
D) The increase in the productivity of clothing workers had a net negative effect on the demand for clothing workers.

Question

Quizplus · Accepted Answer

The increase in productivity means fewer workers are needed to produce the same amount of clothing, thus reducing the demand for clothing workers overall, despite the increase in production efficiency.

In a Simple Economy,there Are 100 Workers