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03-04-2024
Business

contestada

Widgets are provided by a constant-cost industry. Each firm employs one
executive and a variable number of workers. Consider the following two
scenarios:
Scenario A. Executive salaries rise, causing the price of a widget to rise by
$5 in the long run.
Scenario B. Workers’ salaries rise, causing the price of a widget to rise by
$5 in the long run.
Of the two scenarios, which leads to a larger quantity of widgets per firm in the
long run?

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