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Suppose that as a result of recent labor negotiations

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Suppose that as a result of recent labor negotiations, wage rates are reduced by 10% in a production process employing only capital and labor. Assuming that other conditions (ex. productivity) remain constant, determine what effect this decrease will have on the desired proportions of capital and labor used in producing the given level of output at minimum total cost.

 

Paper#25804 | Written in 18-Jul-2015

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