Suppose that consumers choose to smoke less and chew gum more. tobacco companies cut back on the number of people they employ while chewing gum manufacturers employ more. this is an example of a. structural unemployment created by efficiency wages. b. structural unemployment created by sectoral shifts. c. frictional unemployment created by efficiency wages. d. frictional unemployment created by sectoral shifts.

 d. frictional unemployment created by sectoral shifts.

Explanation:

Frictional unemployment is unemployment that results because it takes time for workers to search for the job that best suits their tastes and skills .

Structural unemployment is unemployment arising from a persistent mismatch between the skills and attributes of workers and the requirements of jobs. It usually results from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.

Sectoral shifts refers to changes in the composition of demand among industries or regions .

The efficiency wage theory assumes that increasing wages can lead to increased labour productivity.

Using the above definitions to analyse the situation, it can be seen that there is a sectoral shift due changes in demand of tobacco and gums. This sectoral shift results in frictional unemployment as there are fewer jobs for workers in the tobacco industry to find jobs that will suit their skills.

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