The widget industry is competitive.Widgets (W)are produced with skilled labor (S)such that each skilled worker produces c widgets such that W = aC.If technological progress makes skilled labor more productive,then more skilled workers will be employed

Question

Quizplus · Accepted Answer

When technological progress makes skilled labor more productive, the cost of producing widgets decreases. If the demand for widgets is price elastic, this means that a decrease in price leads to a more than proportional increase in quantity demanded. As a result, more widgets will be produced and sold, leading to an increase in the employment of skilled workers to meet the higher demand.

The Widget Industry Is Competitive