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A firm in a tiny industrial region sells its final products to the international market. Suppose a newly imposed trade restriction on production machines reduces
A firm in a tiny industrial region sells its final products to the international market. Suppose a newly imposed trade restriction on production machines reduces the supply of capital in the region (no other trade restrictions are imposed). Meanwhile, the film keeps its output level unchanged due to some unknown reason. How would the firm's input choice be affected by the trade restriction on production machines?
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