I am on the chapter for the factors of production:
Question:
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? What happens to equilibrium wages?
There would be increase in demand for the quantity of computer works. The demand curve would shift to the right. This would increase the marginal product of labor and wage.
There would be a decrease in the demand for the quantity workers who did not have computer skills. The demand curve would shift to the left. This would decrease the marginal product of labor and wage.
Both equilibriums’would adjust to be equal to the new marginal product.
To answer this question, we need to understand the relationship between technology, marginal product, and equilibrium wages.
When technology advances and computers become more useful to a firm, it is likely that the firm will demand more workers with computer skills. This increase in demand for computer workers will cause the demand curve for computer workers to shift to the right. As a result, the marginal product of computer workers will increase.
On the other hand, the demand for workers who do not have computer skills may decrease because their skills are not as valuable in the face of advancing technology. This decrease in demand will shift the demand curve for non-computer workers to the left, leading to a decrease in their marginal product.
The equilibrium wages for both types of workers will adjust to reflect these changes in marginal product. The increase in the marginal product of computer workers will likely lead to an increase in their wages as firms are willing to pay more for their skills. Conversely, the decrease in the marginal product of non-computer workers will result in a decrease in their wages.
In summary, when technology advances and computers become more useful, the marginal product of computer workers will increase, leading to an increase in their wages. The marginal product of non-computer workers will decrease, resulting in a decrease in their wages. Both equilibrium wages will adjust to reflect the changes in marginal product.