Suppose the cost of labor rises for employees working

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Unformatted text preview: he left); it is more expensive to produce the good. Suppose the cost of labor rises for employees working for a car manufacturer, while everything else remains the same. Wage rates rise from, say, $20 an hour to $22 an hour. As a result, the car manufacturer will produce and offer to sell fewer cars; the supply curve shifts leftward. EXAMPLE: Technology Technology is the skills and knowledge used in production. For example, the technology of farming today is much different from 200 years ago. Today, unlike 200 years ago, tractors, pesticides, and special fertilizers are used in farming. An advancement in technology is the ability to produce more output with a fixed I n 1921, a seller sold something to a buyer for $100. In 2005, a seller sold something to a buyer for $100. Were the two sales, in 1921 and 2005, equivalent? Not at all, because a dollar was worth more in 1921 than in 2005. In fact, a $100 purchase in 1921 was the equivalent of a $1,079.89 purchase in 2005. In other words, buying something for $100 in 1...
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