Imagine a firm that hires two types of workers: some with computer skills and some without. If technology advances so that computers become more useful to the firm, what happens to the marginal product of the two types of workers? What happens to equilibrium wages? Explain.
If technology advances and computers become more useful to the firm, it is likely that the marginal product of workers with computer skills will increase, while the marginal product of workers without computer skills may remain the same or even decrease. This is because the enhanced technology allows workers with computer skills to be more productive and efficient in their tasks, while workers without computer skills might face difficulties in keeping up with the advancements.
The equilibrium wages in this scenario will also be influenced by the changes in the marginal product. The increased productivity of workers with computer skills will likely create a higher demand for them, driving up their wages. On the other hand, the stagnant or decreasing marginal product of workers without computer skills may lead to a lower demand for their labor, resulting in stagnant or even lower wages for them.
To more precisely analyze the impact on equilibrium wages, it is important to consider the relative supply and demand of workers with and without computer skills. For example, if the supply of workers with computer skills remains the same or increases at a slower rate compared to the increase in their demand, their wages may rise significantly. Conversely, if the supply of workers without computer skills remains relatively abundant, their wages may remain stagnant or even decline.
Overall, advancements in technology that make computers more valuable to a firm are likely to increase the marginal product of workers with computer skills and potentially decrease the marginal product of workers without computer skills. The resulting changes in demand and supply for these types of workers will then affect their equilibrium wages.