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Impact of Technology on Labor Demand
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How does the introduction of new technology generally affect the demand for unskilled labor in a competitive market?

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Choose the Best Answer

A

It increases demand as productivity rises

B

It decreases demand due to reduced need for labor

C

It has no effect, as technology is independent of labor demand

D

It only affects skilled labor demand, leaving unskilled labor unchanged

Understanding the Answer

Let's break down why this is correct

Answer

When new technology is introduced in a competitive market, it often changes how work is done and can reduce the demand for unskilled labor. This happens because machines or software can perform tasks faster and more efficiently than people, especially for jobs that require basic skills. For example, if a factory starts using robots to assemble products, it may need fewer workers to do the same job. As a result, unskilled workers may find it harder to get jobs, since employers prefer to invest in technology that can save time and money. Overall, while technology can create new opportunities, it often leads to fewer positions for unskilled labor in the long run.

Detailed Explanation

New technology often makes work faster and easier. Other options are incorrect because Some might think that machines replace workers completely; It's a common belief that technology doesn't change job needs.

Key Concepts

Impact of Technology on Labor Demand
Marginal Revenue Product
Productivity
Topic

Impact of Technology on Labor Demand

Difficulty

medium level question

Cognitive Level

understand

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