8. Suppose Industries C and D produce products that are very similar in terms of availability of substitutes, price, and so forth. Suppose the primary difference between these two industries is that in C labor accounts for about 80% of production costs while in industry D labor accounts for about 5% of production costs. Suppose that there is an increase in overall labor force participation shifting out the labor supply curves to these two industries. We would predict that:
- proportionally more workers will be hired in C than in D and wages will fall by less in C than in D.
- proportionally more workers will be hired in D than in C and wages will fall by less in D than in C.
- proportionally more workers will be laid off in C than in D and wages will fall by less in C than in D.
- proportionally more workers will be laid off in D than in C and wages will fall by more in C than in D.
- proportionally more workers will be hired in D than in C and wages will fall by more in D than in C.
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