Question

Suppose the world price of cotton falls substantially.

(a) The demand for labor among cotton-producing firms in Texas will _______.
(b) The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will _______.
(c) The temporary unemployment resulting from such sectoral shifts in the economy is best described as _______ unemployment.

Answer 1

(A) Decrease

(B) Increase

(C) Frictional

Step-by-step explanation:

An decrease in the price of cotton will cause all the cotton producing firms to put Strategies in place that will help them to cut the costs of operations which will include the REDUCTION OF THE MANPOWER OR WORKFORCE.

When the price of raw materials or inputs used in the production processes of a given product reduces, IT WILL ENABLE THE COMPANY TO WANT TO INCREASE ITS PRODUCTION CAPACITY WHICH WILL ALSO INVOLVED AN INCREASE IN MANPOWER OR WORKFORCE.

Frictional Unemployment is a type of Unemployment caused by seasonal changes such as reduced demand, reduced price of products etc or people changing jobs due to certain factors.