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1. An increase in the relative price of computers shifts the relative demand curve from RD, to RD2. Wage/ [/K rental A 2. The relative

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1. An increase in the relative price of computers shifts the relative demand curve from RD, to RD2. Wage/ [/K rental A 2. The relative wage (W/R) , decreases from (W/R), to (W/R) 2. (W/R) 2 B Ls/ Ks Le/ KC : RD RD. (Lc/Kc)1 (Lc/Kc)2 (Ls/Ks)1 (Ls/Ks)2 Labor/capital 3. At the new relative wage, the labor-capital ratio in each industry increases

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