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Suppose that the economy takes a downturn and as a result, labor costs fall by 50 percent (let's assume that capital costs are unaffected). Show
Suppose that the economy takes a downturn and as a result, labor costs fall by 50 percent (let's assume that capital costs are unaffected). Show graphically and explain what this change in the relative price of labor and capital does to the firm's expansion path.
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