1) From the graph, you can deduce that the development of electric motors led the equilibrium rental price of capital in the United States to _____ .
a) decrease
b) increase
Now consider the effect this change in the capital market has on the labor market. In particular, think about the effect that the existence of these new electric machines has on workers' productivity.
Assuming that labor and capital are used together in the production of furniture, and that the labor supply choice of workers remains the same, illustrate this effect on the labor market in the United States on the following graph.