Unformatted text preview: he left); it is more
expensive to produce the good.
Suppose the cost of labor
rises for employees working for a car manufacturer, while everything else remains the
same. Wage rates rise from, say, $20 an hour
to $22 an hour. As a result, the car manufacturer will produce and offer to sell fewer
cars; the supply curve shifts leftward.
Technology is the skills and knowledge
used in production. For example, the technology of farming today is much different
from 200 years ago. Today, unlike 200 years
ago, tractors, pesticides, and special fertilizers are used in farming.
An advancement in technology is the
ability to produce more output with a fixed I n 1921, a seller sold something to a buyer for $100. In 2005, a seller sold
something to a buyer for $100. Were the two sales, in 1921 and 2005,
equivalent? Not at all, because a dollar was worth more in 1921 than in
2005. In fact, a $100 purchase in 1921 was the equivalent of a $1,079.89
purchase in 2005. In other words, buying something for $100 in 1...
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