State whether each of the following events will result in a movement along General Motor’s (GM’s) demand curve for labor in their U.S. automobile factories or whether it will cause its demand curve for labor to shift (and in which direction). Draw a graph that shows the change you predict.

a. New advances in technology reduce the cost to GM of machinery used in its manufacturing plants. Why does it matter whether the substitution or scale effect dominates? What happens if the substitution effect dominates? What happens if the scale effect dominates?

b. Auto makers adopt a new production process that increases the productivity of their workers.

c. The market wage for automobile manufacturing workers increases.