The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto manufacturing companies can do nothing in response.

Question

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The auto manufacturing companies can respond to the UAW's demands by adjusting the wage rate or by substituting capital for labor (such as investing in more automated equipment). This can shift the demand curve for labor and potentially affect the UAW's bargaining power.

The United Automobile Workers Union Can Select the Most Favorable