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Arm produces a commodity using Capital (K) and Labor {L}. K and Lare perfect complements in production. Igiven current input prices, the rm employs 50
Arm produces a commodity using Capital (K) and Labor {L}. K and Lare perfect complements in production. Igiven current input prices, the rm employs 50 units of L and 5|} units of K to produce 2500 units of output Due to stronger Unions, wages increase by 20%. The rm. however, keeps producing the same level of output alter the increase in wages. The new input mix alter the increase in wages wil be such that: Q a. Not enough information to answer (3. b1 Both K and L remain unchanged Q c. K decreases and L increases C} d. Both K and L decrease Q s. K increases and L decreases
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