7. Consider two industries, A and B. Industry A sells an expensive product for which there are many close substitutes. Industry B sells a unique, addictive, relatively inexpensive product. Suppose both industries find that they face identical labor supply curves and that there is an equal increase in non-labor income for workers in both industries. We predict that:
- more workers are laid off in industry A than in industry B and wages rise by more in industry A than in industry B.
- more workers are laid off in industry A than in industry B but wages rise by less in industry A than in industry B.
- fewer workers are laid off in industry A than in industry B and wages rise by the same amount in both industries.
- fewer workers are hired in industry A than in industry B and wages rise by more in industry A than in industry B.
- fewer workers are hired in industry A than in industry B and wages rise by less in industry A than in industry B.
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