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Assume capital becomes cheaper, firms end up with more capital and routine labor combined (when r falls, K + Lr rises). Show how this change will impact the market for non-routine labor by doing the following steps:
(i) Graph supply and demand for non-routine labor and point out the equilibrium.
(ii) Show how a rise in K + Lr impacts firms' demand for non-routine labor.
(iii) Show how the equilibrium wage and quantity of non-routine labor changes when K + Lr rises.
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