When manufacturing an iPhone, parts must be soldered together. This work can be done by labor or by a robot (capital). More robots will be hired when the price of labor increases. This is known as

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Quizplus · Accepted Answer

The scenario described in the question is an example of the substitution effect, which states that as the price of one input (labor) increases, firms will substitute it with another input (robots) that has become relatively cheaper. As the cost of labor increases, it becomes less cost-effective to hire more workers and firms will opt to use more robots instead.

When Manufacturing an IPhone, Parts Must Be Soldered Together