Suppose the market for autoworkers is initially in equilibrium, but then the automakers purchase capital goods that are a substitute for workers. What happens in the market for autoworkers?
A. The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase.
B. The equilibrium wage rate will increase and the equilibrium quantity of labor will decrease.
C. The equilibrium wage rate and the equilibrium quantity of labor will both decrease.
D. The equilibrium wage rate and the equilibrium quantity of labor will both increase.
Answer: C
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a. True b. False Indicate whether the statement is true or false
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Is the firm in graph in the short run or the long run? How do you know?
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