Example 2.2 in the textbook explains the source of wage inequality in the United States. In terms of supply and demand, the wage of unskilled workers has:
A) decreased, because the supply has increased more than the increase in demand for those workers.
B) decreased, because the demand has decreased, and the supply has increased.
C) increased, because the demand has increased faster than the increase in supply.
D) increased, because the demand has increased, while the supply has decreased.

Question

Quizplus · Accepted Answer

The wage of unskilled workers has decreased because the supply of unskilled workers has increased more than the increase in demand for those workers, leading to a surplus of unskilled labor and thus lower wages.

Example 22 in the Textbook Explains the Source of Wage Inequality