Continuing financial difficulties of their employers

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In response to continuing financial difficulties of their employers, unions representing workers at U.S. automakers have accepted a two-tiered wage schedule, by which new hires are paid less than the standard union wage. How does this change affect the typical automaker’s choice of labor and capital in the long run? Use a well-labeled graph. Explicitly show the scale effect and the substitution effect.

Reference no: EM13795876

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