Discuss the principles that contribute to market equilibrium

The labor market is a constant topic among politicians. Even in the midst of historically low unemployment rates, politicians debate the reasons why many blue collar jobs have disappeared. Majority of these reasons can be summarized to one simple answer: cheaper substitutes. One such substitute is automation. With every passing year, automation technology improves and becomes cheaper. As economists, we know events, such as these, affect the immediate market as well as related markets. All the while, these markets naturally pursue equilibrium.

You are an economic adviser to a political candidate running for the US Senate in 2020. Having never taken an economics course, the candidate needs your help in understanding the basics of how a market, like the labor market, works and how it responds to changes in other markets. Your task is to write a brief memorandum to prepare your candidate for future questions on this subject.

THE PROMPT

Draft a memorandum to your candidate on the subject of the labor market and its relationship to automation. Your memo should:

Discuss the principles that contribute to market equilibrium;
Identify which factors and variables lead to changes in the market;
Explain, in the context of these principles, how an improvement in automation technology affects the labor market;
Explain, how the improvement in automation technology, and its subsequent effect on the labor market, ultimately impact the markets for the goods and services which are produced using labor and automation. (You may treat the markets for the goods and services produced by labor and automation as one market for simplicity.)