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? Explain. Now, suppose the automakers improve working conditions

at the plants. What are the effects? Explain.

What will be an ideal response?


The purchase of capital that is a substitute for labor causes the demand for autoworkers to fall. Fewer workers are hired and the wage rate falls. When the firms make the workplace better, the supply of autoworkers increases, causing an increase in quantity demanded and a further lowering of the wage rate. Whether more or less workers are hired than before both changes occur depends on which effect was greater.

Economics

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What role does foreign direct investment play in international transfer of technology?

What will be an ideal response?

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The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output

A) equals $0.50. B) equals $1.00. C) equals $2.00. D) cannot be determined.

Economics

The table above shows the total product schedule for Shines Car Wash. The market for car washes is perfectly competitive and car washes sell for $5 each. The labor market is competitive and the wage rate is $50 per day

What is the value of marginal product for each worker? How many workers does the firm hire to maximize profit?

Economics