Question

The United States is increasingly outsourcing jobs to India which means that work is done in India rather than in the United States.  

For​ example, the Indian firm Tata Consultancy​ Services, which provides​ information-technology services, increased its work force by​ 70,000 workers in 2010 and expected to add​ 60,000 more in 2011​ ("Outsourcing Firm Hiring​ 60,000 Workers in​ India," San Francisco

Chronicle​,

June​ 16, 2011). As a result of increased​ outsourcing, wages of some groups of Indian skilled workers have increased substantially over the years. Use a​ supply-and-demand diagram to explain this outcome.

Consider the labor market for India illustrated in the figure to the right.

​1.) Using the line drawing tool​, graph a new labor demand curve. Label this curve ​'D^2​.'

​2.) Using the point drawing tool​, indicate the new market equilibrium wage and employment level. Label this point 'e^2.'

Carefully follow the instructions​ above, and only draw the required objects.

Answer 1

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