1. How would a successful effort to increase the human capital of unskilled workers affect their wage? Why?
2. Does the Case in Point on computer technology and labor demand suggest that bank tellers and automatic tellers are substitutes or complements? Explain.
3. What does the airline pilots supply curve in the Case in Point on how she has dealt with wage cutbacks look like? Does the substitution effect or the income effect dominate? How do you know?
4. Given the evidence cited in the Case in Point on the increasing wage gap between workers with college degrees and those who have only completed high school, how has the greater use by firms of high-tech capital affected the marginal products of workers with college degrees? How has it affected their marginal revenue product?
Ans-1. A successful effort to increase the human capital of unskilled workers will culminate in the form of increased wages for the unskilled because the resources spent on them will increase their skill level which will help them garner more money. 2.Bank tellers and Automatic tellers are substitues because one can be easily replaced by the other as we have seen in recent times where automatic tellers are fed with fixed algoriths whch can manage all manual tasks. 3. The supply curve upon a wage cut back shows that the…
bstituation effect dominates the income effect as the pilot has devoted more hours to other alternative uses of his time and thus the backward bending supply curve. 4.If the firm uses the high tech capital, then the demand for workers with college degrees will go up and thus their wages will also rise, so their marginal revenue product should go up.