In a competitive industry, output is produced with skilled and unskilled labor. Factor-biased technical change that increases the productivity of skilled labor, will, at a given ratio of skilled to unskilled labor, shift any given isoproduct curve ________ the origin and ________ the absolute slope of the isoproduct curve (when the number of skilled labor is along the horizontal axis). Pick the best pair of answers

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Quizplus · Accepted Answer

With an increase in the productivity of skilled labor, there will be a shift toward the origin of the isoproduct curve, as the same level of output can be achieved with fewer skilled workers. Additionally, the absolute slope of the isoproduct curve will become steeper, as the productivity of skilled labor has increased relative to unskilled labor.

In a Competitive Industry, Output Is Produced with Skilled and Unskilled