Dan announces a truly revolutionary technological process th

Dan announces a truly revolutionary technological process that turns water into energy. The technology is expected to literally double the productivity of workers. But since implementation takes time, the china economy is expected to adopt this technology only over the next 10 years. If true (and people believed it to be true), Dan\'s announcement would have ___________ effect on current employment and ________ effect on the current real wage according to the frictionless labor market model.

a positive / a negative

a positive / a positive

a negative / a positive

a negative / a negative

Solution

There will be egetive effect in current employment and apositive on real wage.

Since this machine increase the productivity of labours and demand for electricity will remain almost same as now after implementation of that technology there will be an emploment cut.

Now as the productivity is increases value of marginal productivity will also increase and wage will go up.

In the opposite side there will be unemployment in the economy so excess supply of labour will pull down the wage rate.