Suppose the world price of cotton falls substantially. The demand for labor amon

Question

Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will.The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will from such sectoral shifts in the economy is best described as ? . The demand The temporary unemployment resulting unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply. Taxing the price of placing a resume or posting a job opening on a job-search website ? Increasing the benefits offered to unemployed workers through the government's unemployment insurance program ? Improving a widely used job-search website so that it matches workers to job vacancies more effectively

Explanation / Answer

The world price of cotton falls substantially. This fall in price will reduce profit of cotton producing firm. This will induce these firms to reduce production which in result lead to decrease in demand for labor by these firms.

So,

The demand for labor among cotton-producing firms in Texas will decrease.

Firms that use cotton as input will gain as price of cotton will fall. This fall in price of cotton will reduce the input cost for such firms which in result will increase their profit margin. This will induce them to produce more and thus will demand more labor.

So,

The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will increase.

The temporary unemployment resulting from such sectoral shifts in the economy is best described as frictional unemployment.

Improving a widely used job-search website so that it matches workers to job vacancies more effectively would be the policy that would help achieve the stated goal.

Hence, the correct answer is the option (3).

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